Q4 2019 Earnings Call

Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.

[music].

Ladies and gentlemen, thank you for standing by and welcome to the silver resources fourth quarter and full year 2019 earnings conference call. At this time all participants are in listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need a press star one on your tell us.

And if you require any further assistance please press star zero.

Be advised today's conference is being recorded.

I like to hand, the conference over to your Speaker today, Jeff Maggots senior manager of Finance and Investor Relations for Silver resources. Please go ahead Sir.

Thank you Sydney and good morning, everyone. Thank you for joining us for silver boat resources fourth quarter in full year 2019 conference call joining.

Joining me on the call today, our Sean Woolverton, our CEO.

Steve Adam our COO and Chris abandon our CFO.

Yesterday afternoon, we posted a new corporate presentation to our website, where occasionally refer to it during this call we encourage listeners to download latest materials.

Please note that we may make references to certain non-GAAP financial measures, which are reconciled to their closest GAAP measure in the earnings press release.

Our discussion today may include forward looking statements, which are subject to risks and uncertainties many of which are beyond our control.

These risks and uncertainties are described more fully in our documents on file with the FCC, which are also available on our website.

With that I will turn the call over to shop.

Thank you, Jeff and thank you everyone for joining our call the feeling.

A year ago, we spoke of how we expected 2019 to showcase the efforts of our pivot to liquid strategy in silver Boes shift to a more balanced eagle for oil and gas company.

I'm pleased to report that we have made significant strides in implementing this strategy.

On today's call I will review, our exceptional fourth quarter in full year 2019 results.

In addition to providing a brief overview of our 2020 business plan in forward strategy.

Our commitment to driving long term shareholder value is focused on building, a well balanced Eagle Ford asset base and leveraging our in basin experience to diversify our product mix and to drive down costs.

We're executing on our pivot to liquid strategy, which we began implementing at the end of 2018.

We're rapidly growing or oil production improving operational efficiency.

In driving down cost.

Today silver bullet differentiates itself by its ability to adapt to the development program in response to commodity price fluctuations.

And to reallocate capital towards the highest return projects.

Additionally, our Eagle Ford assets are competitively advantaged given their given access to our premium Gulf coast pricing and Mexican export markets.

Starting with fourth quarter of 2019, net production averaged 234 million cubic feet of natural gas equivalent per day.

A 3% increase over the fourth quarter of 2018.

Net oil production for the fourth quarter averaged approximately 4800 barrels per day.

Which more than doubled the rate.

Okay, well production a year ago.

Well in NGL comprise 25% of the company's total net production in 45% of total sales.

Fourth quarter activity was primarily driven by our six well pad and Webb County, which we referred to as our Lemaitre project.

This unique transaction provided us with an opportunity to acquire acreage directly adjacent to our Baskin property.

What was even more impressive was our ability to deliver first sales and approximately six months highlighting the agility of our organization.

This project achieved peak gross production of 100 million cubic feet per day.

With per development costs for well development costs of 6.3 million.

Additionally, improved cycle times resulted in extra calendar days available to us.

And we were able to opportunistically drill and complete an incremental well in December while still remaining within our full year capital range.

2019 full year results reflected the six if successful educate execution a silver both strategy in key objectives.

We increased net liquids production by more than 80% year over year Internet oil production more than doubled compared to 2018.

Full year liquids production grew to 24% of our total net production up from 16% in 2018.

Liquids revenues comprised 41% total sales up from 29% in 2018.

Realized oil and gas prices were 101% of both W. T <unk> in Henry hub pricing.

On the cost side total cash operating expenses for the year were 96 cents per Mcf he down from a dollar three in 18.

Adjusted EBITDA of 233 million increased 38% year over year and total net production increased 25%.

Reflecting the impact of our focus on liquids production growth.

Adjusted EBITDA margin increased to 74% up from 71% in 2018.

Our total proved reserves increased 6% to 1.4, Tc EFI and our crude oil reserves increased 34% to 17.1 million barrels.

We successfully drew our production reserve base and adjusted EBITDA.

While at the same time, reducing our capex by 15% year over year.

Importantly, silver Boas free cash flow neutral over the second half of 19.

Given these accomplishments we reduced our leverage ratio from 2.35 times to 2.06 times year over year.

Our year end net debt of 478 million decreased by 1.5 million from the third quarter of 19.

And we ended the year with 122 million of liquidity.

As the shale industry has matured the mindset for oil and gas operators and investors has shifted to a focus on returns as opposed to growth.

For several years silver both has consistently delivered some of the highest returns on capital employed in the industry.

For 2019, we generated impressive Aro see an 18% for the second your ROE and our trailing three or oxy is 19%.

Silver boat competes not only with peers of similar size, but with operators across all basins.

Having a returns focused mindset to us goes hand in hand with protecting our downside exposure.

We are focused on greater cash flow stability, and increasing or liquids exposure through our oil production growth.

Additionally, maintaining a strong hedge book helps us mitigate the impact of periods of low price environments.

In 2019 realized hedges provided a 25 million dollar offset the lower prices.

Based upon the midpoint of full year 2020 production guidance, 56% of our total production is hedged.

Chris will go into more detail about our hedge position in his section.

Moving to our 2020 outlook, we are maintaining full year, our full year Capex guidance range of 175 to 195 million.

30% decrease year over year at the midpoint in a 40% decrease from 2018.

As it stands today, 100% of our drilling and completion spend will focus on liquids rich areas as we continue to expand and diversify the company's production base.

Full year 2020 production is expected to average 215 to 228 Mmcf per day.

And notably we are targeting net oil production growth of 70% year over year based upon the midpoint of our oil production guidance of 7300 7600 barrels per day.

On an exit to exit basis, the company is aiming to double its net daily.

In fact raining to reach a high watermark of 10000 barrels of net oil per day, and look to exit 2020, with 35% or more of total liquids production.

These would be significant milestones for silver boat further demonstrating our move to a more balanced commodity mix.

Silver Boes primary focus in 2020 is generating free cash flow.

Our drilling development program is flexible.

In fact, our preliminary 2020 budget called for net oil production growth of 25% with an initial capex allocation of 70% liquids and 30% gas.

In light of low gas prices, we're now allocating 100% of our DNC capex to liquid.

As I mentioned earlier, we're now targeting net oil production growth of 70%.

Super Bowl retains flexibility within its scheduled to reallocate capital Accordingly should commodity prices shift materially from today's outlook.

Additionally, the company maintains multiple playbooks on hand for navigating the inherently volatile commodity price environment, we live in.

As the component of our liquids production mix grows we will likely see an uptick in our operating expenses per unit.

For the full year, we continue to target owning cash operating expenses of less than $1 per mcf fee. Despite the increase in liquids production.

Financial discipline is integral to our strategy.

Our proactive balance sheet management prioritizes debt reduction as the initial use of free cash flow.

Well I've detailed our 2020 outlook, we're not simply focused on one year, we're taking the necessary measures to best position silver both for the long term.

Our organizational culture is empowering our team to unlock value on a daily basis.

We have demonstrate we have demonstrated track record of meeting or exceeding our stated objectives and we'll continue delivering on our corporate strategy in the years ahead.

With that I will hand, the call over to Steve.

Thank you Sean moving onto our operational results 2019 marked a year of execution and performance.

The company implemented a number of detailed technical reviews with our vendors to optimize all aspects of the drilling process from mud systems to Downhole Assembly.

These resulted in higher penetration rates parallel operations lower cycle times and reduce costs.

All said, we greatly improved our operational efficiency.

We drilled 32% more lateral footage per day, while lowering costs by 24% as compared to 2018.

Specific to drilling this removed approximately $400000 of costs per well on average over the past six months.

On the completion side improved well site management has more than doubled the number of stages per day as compared to 2018, while reducing completion cost by 26% or nearly 1.3 million of cost savings per well on average.

Our well site management procedures are driving shorter cycle times between rig release, two first stage pumps.

And we've been able to increase pump times, which are driving the increase in stages per day.

On average these efficiencies representing a reduction of six days in cycle time, thereby accelerating time to first sales.

On an overall basis, the average time from spud to first sales reduced significantly from 71 days in 2018 to 43 days in 2019.

These efficiency gains along with silver both continued success in cost reductions are a direct result of silver both operational and supply teams working closely with vendors to negotiate the best prices and logistical considerations for services the materials used in our operations.

During the fourth quarter of 2019, the company brought six net wells online.

Inclusive of the additional while we were able to add as result of faster cycle times.

For the full year the company drilled 27 net wells completed 30, net wells and brought 32 net wells online.

The company's drilling activity was focused primarily on our liquids rich areas, namely Macmillan oil and Lasalle condensate as well as the completion of our first two wells on silver, both new acreage block and Dimmit County.

Together, the Macmall in oil and Lasalle condensate areas comprised approximately two thirds of our net drilled uncompleted wells for the year.

In the Macmall and oil area. The company brought seven net wells online in 2019.

Two of the longest laterals in the company's history were brought online during the second quarter and are continuing to perform.

Utilizing that experience silber BMO drilled two additional 10300 foot laterals and 21 days further emphasizing the drilling team's focus on Executional performance.

These wells were brought online in late January 2020, and are performing inline with expectations.

In the Lasalle condensate area. The company brought 11 that wells online in 2019.

These wells were identified in an under exploited area of the company's position as part of our pivot to liquids development.

The wells continue to perform and are achieving much higher per well recoveries than historical wells in the area, which we shown on page 18 of our presentation.

In Dimmit County, Silver both added 16000 net acres at favorable entry costs during 2019.

The company brought to net wells online, which have performed inline with expectations.

The team is focused on early delineation and geoscience work to identify optimal targeting and large scale development planning.

With the continued strong results from identifying developing under exploited areas in our portfolio.

The company expects to remain active in our liquids rich areas predominantly macmall in oil with some additional development plans for Lasalle condensate.

Also planned in 2020 is delineation drilling and demand county, as we further tests the acreage position to assess the best path towards unlocking the full potential of this area.

In Webb County, the company brought 11 net wells online in 2019.

Five of the net wells were brought online early in the year no. Further activity was expected until the company Opportunistically close a farm and transaction directly adjacent to our highly productive Baskin area, which is detailed on page 21 of our corporate presentation.

This allowed the development of a six well pad with each wells lateral extending to 10000 feet.

As a direct result, the new planning processes. The company was able to close the Mesa project and turn this six well pad to sales and just six months achieving peak gross production of 100 Mmcf per day in December.

Silver bow utilize to completion spreads with all major project to most efficiently complete and bring the pad online.

The two frac crews completed 18 stages per day on average.

And at a peak efficiency achieved rates of 28 stages per day at 2500 pounds per foot.

In the southern Eagleford gas area, we brought three wells online. These wells once again highlighted our continued drive to increase operational excellence as the team was able to reduce the average per well costs from $12 million to $8 million, a 33% decrease from the prior year.

Year over year, our proved reserves increased by 6%.

With our proved oil reserves increasing by 34%.

Included in the Angele changes to our reserve base were 191 Bcf the negative revisions due to gas locations being replaced.

With liquids rich locations as a result of the FCC five year rule.

Additionally, 84 Bcf the of negative revisions were included due to forecast revisions and changes in FCC pricing.

Our pivot to liquid strategy has offset this impact.

As we improved well performance reduce cycle times and decrease development costs.

Year over year, the 34% increase in proved oil reserves compared to a 6% increase improve gas reserves provides silver bowl with a more diversified portfolio and as such a more resilient reserve base.

For full year 2020, we expect to drill approximately 25 net wells and complete 27 net wells.

Building on the gains we made operationally in 2019, we expect further efficiencies in drilling times and costs, along with stages and proppant pumped per day.

This efficiency gives us optionality in our development schedule and an ability to adjust the cadence of our operations throughout the year as we work to optimize the timing of our activity in relation to capital requirements.

With that I'll turn it over to Chris.

Thanks, Steve.

In my comments. This morning, I will highlight our fourth quarter financial results as well as our operating costs hedging program and capital structure.

Yeah.

Peter oil and gas sales were $70 million with liquids, representing 25% of production and 45% of sale.

During the quarter, our realized oil price was 98% of Nymex WT.

Our realized gas price was 96% of Nymex Henry hub.

And our and our realized NGL price was 26% of Nymex WT.

Our cash gain on settled hedge contracts for the quarter was $8 million as of February 25th Silver Bow had 56% of total estimated production volumes hedged for the full year 2020.

Using the midpoint of guidance a production guys.

Our expected oil production is 85% hedged with a weighted average price of $55.26 per barrel are expected gas production is 56% hedged with a weighted average price of $2 and 66 per M. MBT.

Again, these hedge positions reflect our current position as of February 25th as we have executed additional oil swaps thus far in 2020.

Given opportunistic price spikes in February.

In addition, we continue to use basis swaps to manage our exposure to differentials for 2020, we have gas basis hedges on a 129 mmcf per day with a weighted average differential of negative four cents.

Turning to cost and expenses Hello, We was 26 cents per Mcf the for the fourth quarter.

7% below the midpoint of guidance.

On a per unit basis, although we had increased slightly from a year ago.

As a result of higher cost liquids production within our portfolio.

Transportation and processing costs were 33 cents per Mcf fee for the fourth quarter production taxes were 4.1% of sales or 13 cents per Mcf.

Coming in below the coming in below the low end of our guidance range.

Adding our alley, CMP and production taxes together, we achieved total production expenses of 72 cents per Mcf down from 74 cents per Mcf, the last quarter, and which we believe standout amongst our peers.

Cash DNA of $4.6 million for the fourth quarter compared favorably to the midpoint of guidance of $5.1 million.

Full year 2020, we are guiding free cash DNA of $19.5 million at the midpoint, which is slightly higher compared to our 2019 cash DNA as we absorbed one time costs in relation to reason Rightsizing method.

Even with these onetime items, our cash DNA per unit is set up to be peer leading again this year.

Total cash operating expenses, including cash DNA.

Totaled 94 cents per Mcf fee in the quarter well below the one dollar per Mcf target, we set at the beginning of last year.

In total strong production to end the year and efficient operations resulted in adjusted EBITDA of $58 million up 2% compared to a year ago.

Capital expenditures totaled $54 million in the quarter, bringing full year 2019, capex to $262 million as Sean said, our 2020 capital budget is $175 million to $195 million.

With 90% allocated to DNC capital.

100% of IDN Seaspan is focused on liquids projects.

For first quarter 2020, we're guiding for average production of 231 to 238 Mmcf per day.

And for full year 2020, we're guiding for average production of 215 to 228 Mmcf per day.

Specifically on oil, we published first quarter oil production guidance of 4550 to 4700 barrels per day.

And full year guidance of 7300 to 7600 barrels per day.

On a full year basis, our guidance implies 30% of net production will come from liquids up 24% from full year 2019.

Additionally, we have elected ethane rejection under our processing arrangements. During the first three months of 2020 and have assumed ethane rejection and our full year production guidance.

This reduces our NGL volumes and impacts equivalent volumes by approximately three mmcf per day.

Adding incremental revenue.

Courage you to review our corporate presentation on our website for our latest expectations as it relates to production pricing and cost guidance.

Finally, looking at our balance sheet, we had $279 million outstanding under our revolving credit facility at the end of the quarter and our liquidity position was $122 million.

As of the into February the Mark to market value of our hedge book was approximately $50 million. All of this all of this is to say that our balance sheet remains strong flexible and have strategic optionality under current market conditions to navigate the near term environment.

We expect to fully fund our 2020 capital program with cash generated from operations and borrowings under our credit facility.

At the end of the fourth quarter, we were in full compliance with all of our financial covenants and had significant headroom.

And with that I will turn it over to Sean to wrap up our prepared remarks.

Thanks, Chris.

To summarize 2019 proved to be in another exceptional year for silver both.

We entered the year running two drilling rigs before dropping down to a more steady pace of activity in the spring and through the remainder of the year.

Currently we feel confident in our ability to generate value while running just one rate as we continue to prioritize our highest return projects and focus on furthering our efficiencies and cost structure.

Given the current natural gas backdrop, our focus is on efficient oil production growth centered around building long term intrinsic returns through a diversified commodity base.

So we will silver boat will operate with disciplined capital allocation.

Proactive liquidity management and as always a return focused mindset.

Currently we will remain patient and opportunistic towards strategic M&A opportunities.

I'm extremely proud of the accomplishments of this organization.

Outperforming internal expectations is not easy cost reductions and operational efficiency gains are not a given.

I have asked a lot of our team and our team has risen to the location.

As I look ahead I see the early any of silver Boes transformation that extends well beyond 2020.

The company is expanding its balance commodity portfolio and has repositioned itself to no longer be considered a gas company, but a unique diversified company that has exposure to oil and gas in a single basin.

As we established ourselves as the partner of choice in the Eagle Ford, We continue to look for opportunities large and small to further our successes and expanding our balanced inventory at favorable entry costs.

While our liquids growth strategy is rapidly improving our results the steps, we're taking our positioning the company for sustainable free cash flow and shareholder returns.

We continue to drive greater profitability and strive to be a leader amongst our peers.

Just to recap 2019 was a great year in we are excited for what 2020 has in store.

We are well positioned to generate free cash flow continue our oil growth and manage our balance sheet.

Thanks for joining us for today's call in for allowing us to share our results.

We look forward to our first quarter in providing further updates on next on the next call.

With that I will turn the call back to the operator for the Q and a portion of our call.

Third ask a question you'll need to press star one on your telephone.

Your question press the pound Keith please standby well, we compile the Q and a roster.

And our first question comes from Neil Sigman with Suntrust. Please proceed with your question.

Good morning shut in team. My first question is on capital disciplined activity I'm just wondering goal.

Run this had running one rig probably been night in fourth quarter when looks like oil averaged about LLS averaged about 60 and.

With that you generate a slight free cash flow for the statement and I was just Warner's. My question is really with LSW down about 20% currently versus for a Q and I'm just wondering if oil sort of stays in this.

What do you all just I'm just wondering what sort of concern what do you all considered or what's the primary driver.

Would potentially cause you to change maybe go to a parcel rig no rigs.

I am just sort of curious I mean I saw it today I mean, obviously exxon for other side decide to materially changed their plan they announced that this morning. So I'm just wondering what it would take for you all to the you know caused you to change that and I guess, the second part of that sort of long winded question is.

Is that and I get your plan, Sean so far but it just the way. This irrational market is coin do you think that's enough.

You know judging by your stock price, obviously being down about 70% year to date.

Yes, no for us Neil.

We're definitely returns focused so what we always look too is.

Can we generate returns 30% to 40% at the prevailing commodity prices.

We have an asset base that allows us a shift capital.

As oil prices increase or decrease relative to gas prices. So we'll be really focused on our returns what we've done for ourselves this year.

We have locked the in pricing it very favorable level.

That generate those return targets that that I mentioned.

Of course, the other thing we'll always look at is managing proactive management of our balance sheet to ensure that our capital program is funded within levels that we're comfortable with.

So.

It's difficult in this environment, but were more long term focused versus reacting to.

Short term swings in volatility in the market and we've positioned the company to really thrive and a low cost environment, our cost structure being below $1 of Nmcf sets us up to really make money in this environment and then as prices move up it exposes investors.

Two significant increase in share performance as commodity prices return to what I think will be necessary levels.

Continued development I had not seen the Exxon announcement, but kind of speaks to just what I was saying low prices, usually fix low prices as the companys probably take the same view that we do we can invest if you're generating returns overtime that will reduce the amount of commodity in the market and we'll move.

This is up to where we can start drilling again.

Yes that makes sense, okay. Great details and then my second question is on on M&A and you hit a little bit of this im just wondering we've heard a bit about this I am just wouldn't have you all would consider other potential accretive deals out there that.

Just wondering obviously would make sense if you could find something that you could.

Combined step into you know add whatever you want to call. It that that immediately would be accretive to even bring leverage down more I'm. Just wondering is the bid ask still too wide and again you guys see 100 more of those in a weekend and then I'll ever see so I'm just kind of curious to gauge the temperature of the market on that if if we're just.

[music] faraway still.

Yes, no I think the volatility in the market is going to make transactions difficult bid ask continue to be have some spread to them.

With in terms of being accretive deal this accretive.

Our mindset is that we've positioned ourselves through our operational efficiency gains are lower cost structure that assets that are in other.

Anthony that don't generate returns because of more inefficient assets, that's where we're positioned to take control those assets and generate returns than others can't.

Don't lead into less component I'd add onto it is funding of transactions is very challenging in this market capital is scarce in so finding an attractive.

Feel where you can get to an agreement on the bid ask is then further complicated by access to capital.

Yeah, we about that part there. Thanks, so much on yes, I appreciate the questions Neal thanks.

Thank you next question comes from Dan Mackintosh. Please proceed with your question.

Good morning genre.

Doug.

Sure.

I think that's falling on the stores should be pretty pleased with the big emphasis on on the liquids in oil. This year wondering if you could give us an idea around inventory kind of analysts Alembic mall and and then it would damage becoming a bigger part of the picture. This year a couple more delineation wells, maybe if you could talk a little bit about what you're hoping to find there and do you think that becomes a bigger.

As a program and 21.

Yes, as we think about.

You are liquids inventory, our focus remains in Lasalle and Mcmullan, where we have no several years of inventory that meets our return thresholds at current prices.

When I say current prices were thinking around the 50 dollar market in 250 price Mark on gas.

So we'll stay focused there, but we also want to always be expanding our liquids inventory.

The Dimmit County position, we acquired.

That the block.

Because of our beliefs in a tremendous amount of.

Oil in place our first two wells confirmed our IP our production profile that we expected.

As we test the lock further in expand the delineation of the block in 2020, our goal is to really start moving capital balance ultimately, we envision being able to drill that block at well costs below $4 million, if not even below three and a half and are in our strategy or.

Plant is key stay focused on Lasalle molin over the next few years really set up volume to go into full development mode, probably more in the 22 timeframe in beyond.

Okay, great. Thanks, and then obviously liquidity liquidity is going to be a big point of emphasis or the big focus as we go into spring on Slide 31, you mentioned noncore asset sales just was wondering if you could give us a little more color around that.

And your confidence in the ability to get some things down there and maybe give you a little more.

One of war room on the liquidity fronts.

Yes.

As we look through our asset base, we actually.

From our legacy.

Physician have some assets outside of the Eagle Ford.

Primarily located in the powder River basin small smaller position, mainly overrides that we currently have those in the market and expect that the will be in a position to announce a transaction on that.

Our first quarter call.

Alright, great. Thank you very much.

I appreciate Golden Thanks, Kevin I. Thank.

Jim.

Thank you next question comes from Jeff with Northland Capital Markets. Please proceed with your question.

Good morning, guys, well just kind of wondering.

Maybe you could take us through maybe from a high level kind of how you guys are expecting that ramp to play out on the oil side up to that 10000, a day Mark that you mentioned for a peak for the year and maybe more on kind of the medium longer term as we think about that number can you just to talk about a little but maybe the sustainability of that does that.

Well, you could get to and and 21 from from an average basis or just kind of wonder I guess, how we should think about that number in the context of more of a longer term trajectory for you guys.

Yes, I appreciate the question the something that we obviously are very focused on.

Let me maybe walk walk you through how we've positioned ourselves to be.

In a position to see this ramp really two drivers behind our operational efficiency gains that we've reduced cycle times, both on the drilling and completion portions of our business by over 30%.

So the first half of the year relative to our budget that we outlined.

During our third quarter call.

Really changed from bringing projects forward.

Providing an example, we had a three well Pratt three well pad that we had anticipated bringing on in April that came on February 15th. So a good portion of the first half of the years ramp is being driven by acceleration of capital programs.

The continued ramp into the second half of the year, then is being driven by our decision to allocate 100% of our capital to oil and liquids projects. So we are taking advantage of more efficient operations, and then increasing capital towards oily projects as well.

We look into 21.

We'll exit this year at a level higher essentially double where we exited 2019, so we'll exit no incentive.

19 at 4500 barrels will be at 9500 barrels or so so that the.

Initial base and at this point when we'll plan to allocate the majority of our capital in 21 towards oil, which should be able to continue to grow the liquids percentage ultimately our goal is to get to a 50 50 liquids gas battlements sometime in the 21.2 timeframe.

Got it and maybe some are more specifically on that's kind of Belmont on the mix fried does that shift to kind of a more balanced mix come as a result of gas declines or does oil can can you continue to grow oil volumes, where the one rig program off of that 10000, a day marker to things kind of stabilize at that level.

Yeah good.

[music].

A component of both our gas not drilling any gas is declining.

What we'll see though is as we move a year two years out away from gas drilling.

We'll have come down to decline curve and see more stabilized gas base that will be able to ramp in the future if gas prices predicated.

And so the the.

Percentage increase to liquids is driven by that declining gas.

But it's accelerated further as we put more and more capital to work on the oil side.

The combination of both.

Got it okay, perfect and last one for me.

On the yes got parent child, and feel and field development fried can you guys just give us a sense in terms of the 20 program.

How you guys are kind of view in the split as you guys kind of maybe want to define parent child or I guess, how you guys are maybe risking the model are observing any kind of production implications associated with.

Finally kind of being in some of the areas like Macmall in that have some legacy wells you guys, obviously have to be cognizant of.

Yeah, as we've done a lot of our subsurface work.

And come to you a lot of detailed the reservoir analysis, we really are honing in on well spacing at about 500 foot for inter well spacing.

We really havent thrilled much in the company at lower levels, but have looked at offset operators.

Tighter spacing to cover that conclusion.

So we believe that.

At 500 foot spacing, you may see some interference, but it's going to be pretty limited and for the most part were accessing the reserve.

One benefit that we are encountering is areas that we've gone back into were developed back in 2012, and 13 timeframe. So in some instances, we actually are seeing a re stimulation of the offset well in seeing an uptick in volumes there.

Got it great details for the time geis.

I appreciate fall Jeff Thank you.

Thank you and this concludes our Q and a session I will now turn the call over to Sean will version for any further remarks.

Thank you.

Great everyone's the listening in on the call we feel like we're delivering significant value at the company, making tremendous operational strides and are really excited about 2020 and look forward to catching back up with you in may.

Thanks.

Ladies and gentlemen. This concludes today's conference. Thanks for participating you may now disconnect.

[music].