Q1 2020 Earnings Call
[music].
Greetings and welcome to the Antero Midstream first quarter 2020 earnings conference call and webcast.
This time all participants are in listen only mode. A question and answer session will follow the formal presentation.
Anyone should require operator assistance during the conference. Please press Star Zero honor telephone keypad.
Note that this conference is being recorded.
I'll now turn the conference over to our host Michael Kennedy Senior Vice President of Finance and Chief Financial Officer for Antero Midstream. Thank you you may begin.
Thank you for joining us for Antero Midstream is first quarter 2020 Investor Conference call.
We'll spend a few minutes going through the financial and operating highlights and then we'll open it up today.
I'd also like to direct you to the home page of our website at Www Dot Antero midstream Dot com, where we have provided a separate earnings call presentation that will be reviewed during today's call.
Before we started our comments I'd first like to remind you that during this call and Taro management will make forward looking statements such statements are based on our current judgments regarding factors that will impact.
Future performance of Antero resources, and Antero midstream.
And are subject to a number of risks and uncertainties many of which are beyond anteros control.
Actual outcomes and results could materially differ from what is expressed implied or forecast in such statements.
Today's call May also contain certain non-GAAP financial measures.
Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures.
Joining me on the call today, our Paul Reighty, Chairman and CEO of Antero resources, and Antero Midstream, Glenn Warren President and CFO of Antero resources, and President of Antero Midstream and Dave kind of long ago, Vice president of liquids marketing and transportation.
With that I'll turn the call over to Paul.
Thanks, Mike.
I'd like to start by discussing the updated development plans and capital budgets add Antero resources and Antero midstream on slide number three.
Titled.
Flexible and just in time capital budget.
The left hand side of the page illustrates a ours drilling and completion capital budgets, which have remained flexible based on commodity prices and targeting free cash flow.
In March they are announced a reduction of its drilling and completion capital budget.
From $1.15 billion to $1.0 billion as a result of achieving DNC capital costs savings ahead of schedule.
These savings were driven by flowback water savings and increased and.
Increased efficiencies.
Chaz daily drilling footage improvements and an increase in completion stages per day.
This allowed a our to maintain a DMC capital budget that approximated free cash flow even after the initial decline in commodity prices.
In order to maintain its financial profile and liquidity.
There has further reduced its DNC capital budget to $750 million in response to the unprecedented demand impacts from the global Covet 19, pandemic and oil price floor.
This reduction was driven primarily by the deferral of 20, well completions from 2020.
Into 2021.
Importantly, given the visibility am as into a ours development plans am has quickly adapted to these changes and lowered its capital budget from an original budget of $300 million to $325 million in February to a range.
Of $215 million to $240 million today.
All right up to our updated capital budget represents a 27, 27% reduction.
From our original capital budget, and a 65% reduction compared to 2019 capital expenditures.
Looking ahead should natural gas prices continue to strengthen.
Hey, our has for dry gas Utica pads that are development ready and can be feathered in to the 2021 drilling program.
These dry gas pads require very little additional capital investment from am and are located nearby existing infrastructure with excess capacity.
This development plan visibility and pure Pele pure play Appalachian focus is a competitive advantage compared to midstream gathering and processing companies that have a multitude of producers across various basins.
Our coordinated planning with a our reduces uncertainty, particularly in today's environment and allows am to have a more stable financial policy that benefits our shareholders.
Slide four titled.
Kniffin liquidity enhancements illustrates the recent liquidity developments at a higher.
First a ours borrowing base under its credit facility was confirmed at $2.85 billion well in excess of lender commitments of $2.64 billion.
As a result, a our head over $1 billion of liquidity under its $2.64 billion credit facility as of March 31, 2020, which is shown on the dark Green bar on the left hand side of the page.
Hey, ours updated development plan is expected to generate $175 million of free cash flow in 2020 further improving its liquidity position.
Assuming execution of the remaining sales under a ours targeted asset sale program of $900 million.
Hey, Eric would have over $2.1 billion in liquidity at year end 2020.
Prior to any further bond repurchases.
Over the last two quarters, a our has taken a proactive approach to debt reduction repurchasing $608 million of notional senior unsecured debt at a 20% weighted average discount reducing total debt by $120 million.
The par value of the remaining 21 2021, plus 2022 maturities is $1.491 billion.
The market value of the remaining 2021 and 22 senior notes net of what has been repurchase to date.
As shown on the right hand side of the page and totals $1.104 billion as you can see due to its broad range of assets and natural gas rather than oil focus.
Hey, our should be well positioned with sufficient capacity to repay it's near term maturities.
In addition.
Our continues to focus on asset sales cost reductions and other opportunities to enhance its liquidity position.
Before turning the call over to Dave I would like to briefly walk through a ours updated hedge position on slide number five titled enhanced natural gas hedge position.
Hey Air has continued its consistent hedging program and taken advantage of a natural pricing strength on the back end of the curve.
During the first quarter a are added 688 MMP to use a day of gas hedges at an average price of $2.48 per M. M. B to you.
As depicted on the slide a our is 94% hedged on its expected 2020 natural gas production and 100% hedged on its expected natural gas production in 2021.
In addition, we expect air to continue to proactively hedge volumes in California to and beyond as prices continue to improve.
In addition, antero is 100% hedged on its twentytwenty oil and C plus production.
At an oil price equivalent of $55.63 per barrel.
Dave will discuss the northeast storage situation and the impacts from cobot 19 on the NGL and condensate markets, but these hedges provides significant price protection for a ours liquids production.
This consistent approach to hedging drives development plans stability across commodity price cycles, which in turn benefits a app.
With that I'll turn the call over to Dave.
Thank you Paul.
Ill begin by providing an update on in basin, the condensate market dynamics.
The cobot 19 pandemic and the nationwide stay at home order have severely impacted demand for transportation fuels, resulting in a dramatic decline and refinery runs.
I haven't turned witnessed a reduction in purchases of Appalachian oil condensate from the traditional buyers in the basin.
Prior to the Cobot 19 pandemic Antero has developed a diverse set of buyers and sales points as well as offsite storage capacity.
Since then we have expanded our customer base and nearly double our innovation storage capacity.
To date. They are has not had to shut in or curtail any production as a result of storage constraints.
We are confident today that we have the firm's sales and storage in place to produce our wells at full capacity at least through the summer.
Due to the proactive steps taken at Antero to secure additional oil storage and sales, we expect that regional and national demand will be restored to a great extent before we would see any significant impacts to our production.
Importantly, they are as 100% hedged on its oil and Pentanes production, but two products most impacted by cobot 19 demand destruction at an average price of $55.63 per barrel.
There is still uncertainty about how long stay at home mandates will remain in place and therefore reduced demand, but we are set up to weather the storm with minimal impact to our production for a prolonged period.
Now, let's turn to slide six and discuss the NGL macro environment.
The cobot 19 pandemic has not impacted global demand for NGL products nearly as much as it has impacted demand for transportation fuels derived from oil.
The restarted economic activity in Asia, coupled with lower LPG production from refineries in the US and abroad has led the strengthening prices for LPG on a relative basis to Wi Fi as shown on the left hand side of the page.
NGL prices have decoupled from Wi Fi prices, highlighting the inelastic global NGL demand from petrochemicals and residential commercial markets further supported by government subsidies in countries like India.
This is particularly evident as the C plus NGL percent of Wi Fi ratio has nearly doubled since February and the strengthening has occurred during the shoulder season, what NGL prices are historically the weakest.
The right hand side of the page illustrates Asia propane prices, which have already bottomed and continue to recover as economic activity resumes.
Importantly, antero is well positioned with access to international markets through Mariner East two where we have not seen any impacts on our ability to export lpgs.
As a reminder, antero has the ability to adjust our cargo destinations based on the most favorably priced markets, which has included taking advantage of strengthening prices in Asia.
LPG prices in Europe have been slower to recover as economic activity has yet to returning a meaningful way in storage levels remain elevated.
Consequently, anteros targeting Asia destinations with our discretionary cargos. Meanwhile, they are has hedged essentially all of its projected 2020 propane exports to Europe at 55 cents per gallon net of shipping or 37% above current strip prices.
Moving to the supply side of the equation on slide seven.
We expect the decline in North American oil production is anticipated to result in a significant reduction in associated NGL production.
Everyone is familiar with the associated gas story that is gas production associated with oil production, but the impact of the decline in associated Ngls is expected to be even more pronounced as we move into next year.
This rollover and NGL supply results and sufficient LPG export capacity for the foreseeable future that has historically historically constrain us NGL pricing in production as illustrated on the right hand side of the page.
We expect us to result in a strengthening of domestic NGL prices towards Brent like international prices overtime.
For several years now the US has been critical to global LPG markets responsible most recently for supplying well in excess of 50% of the world's waterborne LPG imports and growing.
And our most recent NGL fundamentals analysis updated last quarter. The us was needed to provide an incremental 445000 barrels per day of LPG to world markets by 2022 to satisfy global growth driven by the residential commercial and petrochemical markets.
Both us and OPEC plus NGL production anticipated to be in decline over this timeframe. The backdrop for Ngls begin to look similar to the scenario. We saw play out in 2017, and 2018, resulting in strong NGL prices precipitated by a period of low oil prices and declining us production with that I.
I will turn it over to Mike.
Year over year midstream throughput.
Starting top left portion of the page low pressure gathering volumes were 2.7 Bcf per day in the first quarter, which represents a 6% increase from the prior year quarter.
Compression volumes during the quarter averaged 2.5 Bcf per day, a 12% increase compared to the prior year.
Or 50, 50 joint venture growth processing volumes averaged 1.3 Bcf per day, a 33% increase compared to the prior year quarter.
Processing capacity was 95% utilized during the quarter.
JV gross fractionation volumes averaged 33000 barrels per day of 50% increase from the prior year in freshwater delivery volumes averaged 183000 barrels per day, a 20% increase over the prior year quarter.
During the first quarter, a our average over seven completion stages per day, which was ahead of budget and resulted in stages originally scheduled for the second quarter.
Shifting to the first quarter.
As a result, we expect the reduction in completion activity combined with this schedule shift to result in a decrease in freshwater delivery volumes in the second quarter 2020.
Moving on to financial results adjusted EBITDA for the first quarter was $217 million to 7% increase compared to the prior year quarter.
Distributable cash flow for the fourth quarter was $164 million, resulting in a DCF coverage ratio of 1.1 time.
Capital expenditures during the quarter $80 million.
56% decrease compared to the first quarter of 2019.
During the first quarter, we generated $99 million of free cash flow before dividends.
Compared to an outspend of $2 million last year as depicted on slide number nine.
Ammons reached an inflection point of generating free cash flow in 2020, as we leverage our existing midstream infrastructure.
The free cash flow generated first quarter.
Places us on track to achieve our increased free cash flow guidance of $420 million to $450 million for the full year 2020.
Moving on to balance sheet and liquidity on slide number 10 as of March 30, Onest 2020, Antero Midstream had 1.17 billion drawn on its 2.13 billion revolving credit facility, resulting in approximately <unk> billion dollars that liquidity.
Additionally, am's net debt LTM adjusted EBITDA was 3.7 times at quarter end.
Importantly, am's near as senior note maturities until 2024, and it has an attractive term debt structure over the next several years.
I'll finish my comments and slide number 11 that summarizes the guidance changes we announced.
Yesterday.
And is well positioned to adapt to the uncertainties in today's environment.
With leverage over a turn lower than appear averaging approximately $1 billion liquidity.
Further we have $420 million to $450 million of free cash flow before returning capital, which gives us tremendous flexibility.
Paul Men mentioned, we had the benefit of real time information from our primary customer, which allows us to quickly adjust our capital program and be one of the most capital efficient midstream companies in the industry.
As a result, we have taken over $85 million out of our 2020 capital budget alone.
We'll continue to flex our capital budget up or down in response to a arts development plans.
Antero midstream does not have any long long cycle time projects that result in flexible capital budget and as a result, our leverage is expected to stay in the mid to high three times range.
These capital budget reductions more than offset the change in our adjusted EBITDA guidance.
Which resulted in improved free cash flow profile by $35 million at the midpoint or 9% improvement.
Unlike a lot of GNS, GNP peers, and not facing declining throughput and uncertainty from oil shale plays.
Further we have not had any operational or throughput issues. The date as result of Kobin 90.
But we'll continue to monitor our guidance capital budget ensure we maintain our financial strength and flexibility.
In summary, we continue to be pragmatic and diligent.
In response to the current uncertainty driven by the Kobin 19, pandemic and I'd like to thank all of our employees for their dedication during these unprecedented times.
With that operator, we're ready to take questions.
Thank you.
This time will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad. The confirmation tone. We indicate your line is in the question Q you May Press Star too if you would like to remove your question from the Q.
For participants do you think speaker equipment, it may be necessary to pick up your handset before pressing the star Keith one moment, while we pull for questions. Thank you.
Our first question comes from Kyle May with capital One Securities. Please state your question.
Good morning.
To start with.
The freshwater side of business.
You talked about 20, well completion fluid pushed into next year can you talk about your expectations for wells that will be service with fresh water in the second quarter of this year, and then kind of cadence through the balance of the year.
Yes.
Obviously when we.
Service to freshwater that's ahead of the completion so on a ours call. We talked about how we did 25 wells completed in the first quarter and about 45 in the second for a lot of that water was pushed into the first quarter.
The water does come down.
Looking ahead into the second half of the year, a our is going to complete approximately 30 to 35 wells. So.
The second quarter will be down.
From that so we did about 35 to 40 wells in the first quarter and goes down about 20 in the second.
Got it Okay. That's helpful. And then also on the Antero resources call. It sounded like youre leaning towards a maintenance mode for 2021, if that plays out as expected what kind of Capex, which you would you need antero midstream to support that level of activity.
Yes, looking out the Capex this years to 52 forward it averages about $200 million.
And 21 kind of where we're at our Capex continue to decline of hopefully we can work that down from there but.
$200 million is our estimate.
Got it and last one if I can.
Previously you've talked about doing more water recycling in the field. After you idle to Clearwater facility can you give us an update on this program and how we should think about the mix of activity between infield recycling and outsourcing to third party for the balance of year.
Well, our our infield recycling has been very successful our goal is a 100% recycling we hit at a number of times, but.
Typically where anywhere from a third up to 60% of flowback water.
Teams water teams have made that great efficiency improvements. So that's that's going along real well and.
We feel very good about the path that we're on.
Okay. That's helpful hats off to me. Thank you.
Thank you. Our next question comes from Tarek Hamid with JP Morgan. Please state your question.
Good morning.
I wanted to ask quickly about how you're thinking about the balance sheet right now given.
Well the puts and takes on Capex as well as distribution you know you've talked about the three to four times leverage ratios kind of being your target you certainly within there now is it sort of fair to say that remains to target.
Yes, no we feel good about an like I mentioned, we're at 3.7 times and we see that kind of a level that we Spain over the next couple of years.
Comments.
And I guess as you think about.
Liquidity currently obviously, you're a little bit drawn on the revolver now so how do you think about the right number of liquidity at.
To run the business on a go forward basis kind of given all the uncertainty.
Yeah, we have a billion dollars that's ample liquidity, we don't really draw much on the credit facility on a go forward basis, we have.
Even not that maintenance capital for a our we have continued EBITDA growth into 2021, and our capital continues to decline. So you really don't draw much going forward, so having a billion dollars liquidity plus or minus feels good.
And then just last one for me if you think about just the return of capital sort of how do you balance distributions versus share repurchases. Obviously, you've used both the last 12 months just love to get a sense, how you're thinking about that mix going forward.
Yes, we have about $150 million left on our repurchase program.
Obviously, where the equities out right now it's attractive to us So thats why you saw us.
Being active in the first quarter.
I would think.
Continue to be active on that going forward it kind of similar levels that we had in the first quarter.
So we like buying back shares at these prices.
Got it that's it from me thank you very much.
Thanks, Eric.
Our next question comes from Sunil Sibal with Seaport Global Securities. Please state your question.
Hi, good morning, ladies and things around liquidity.
Just had one quick.
Good soon so when we look at the you know the guidance that you have given.
Oh losses, which reported in Q1, so it seems like you will have some.
Headwinds in for him into the year.
It's not all primarily driven by a lot of segment and and completion activities. There auto has been.
The factors, which are driving that.
No just a lot at a throughput is as expected.
Our guidance the same for 2020, so it's really just a deferral those.
20 wells completions, it's obviously would have been completed with our water system.
In 2020 being deferred into 21.
Okay, and the fact that he did.
Much higher completions in the Q1 kind of pulling some of those revenues flow rate Thats right Yep.
Got it.
And then one on.
Capital allocation kind of framework.
So if the conditions you know what to do it in terms of.
Commodity pricing it sits on you know reflect on its plans.
I was wondering you know.
For the next kind of leverage the Max Oh that to let it run two before do you.
Hi look at returning cash to shareholders that whole should do tingle or how should we think about video ability in the love rates versus your goes over to done in cash to shareholders. Thanks.
Yes, it's not a Max that's our financial policies to go up four times of its hard for me to even envision a case, where it goes higher than that I think you've seen how flexible the capital it am as Philippe Ares capital's less than am's kind of have much less capital as well so being fixed fee have acreage dedication.
It's a very stable business, so and that just in time portion and not having any in flexible capital really bodes well for am side, just I don't really see how it could go above four times, but our finance policy is to not exceed that but.
We're in good shape.
Okay. Thanks.
Thanks, Thank you.
Our next question comes from Jeremy tonnage with JP Morgan. Please state your question.
Hey, Good morning, guys. This is James on for Jeremy.
You just start with maybe the incentive fee program I think when you guys release that back in December that was kind of built around 8% to 10% production growth from from Antero not you know it seems to be have changed with that mysteries morning.
You can you share any updated thoughts there.
Yes, I know, it's working well, we design that into summer for incentive growth for a our and as you know the first six months at 2.7 Bcf per day, and a little pressure in the air was able to deliver to 717, so they hit that plan and there's growth.
From a are in the second third quarter. So we do see them achieving those growth incentive fees in the first three quarters. So.
We have that $36 million rebate in our guidance.
So it's working as planned I think we'll see Oh.
The year progresses, and where the volumes go they could potentially hit fourth but that should be seen but right now it's working as planned.
Got it thanks and then.
Yes, I will answer your question, but.
Looking at its more than 21, the broader implications there for antero midstream given the maintenance mode. A scenario that you guys are running at a our.
Directionally, where should we think about.
Given the situation fluid and there's a lot of pieces, but directly where should we think about antero midstream is outlook there.
No it's good.
As I mentioned, our EBITDA is still growing you're still even maintenance capital you're still growing on am dedicated lands.
So our EBITDA still growing in 2021 couple of percent. So definitely it's come down from the high single digits, the low single digits, but still growing and in our capital continues to decline so.
See actually capital next year lower than 2020, so that.
Free cash flow profile is actually increases.
21, so it looks good Fran.
Great. Thanks, that's helpful. Appreciate the color.
Thank you.
Our next question comes from Gregg Brody with Bank of America. Please state your question.
Hey, Greg.
Good to talk to them.
So you you mentioned the refund chalet animal payday, our how's that going to flow through just the.
The financial statements, how should we think about that.
It's just a 12 million dollar reduction in the fees. So it'd be you wouldn't see we just have $12 million less of LP revenue.
Okay, and then that would suffer and they are side it would just be a lower cost.
Right, it's a slightly lower in the GP and key line item.
And you also mentioned.
I didn't jump into this on the credit facility, but since you've been talking about they are so quite a bit.
There's some flexibility it sounds like you've mentioned the and the press release and if you look through the amendment you can see there's flexibility for sales.
How certain sales how how does your design the credit facility changes to allow for sales what's how much can you actually sell without liquidity on the IR facility coming down.
Yeah I will.
First thing to note is when you when you think about the asset sales, it's the borrowing base impact it's not the actual proceeds and if you can imagine you know the price decks that the banks use there wasn't really much on development undeveloped value potential value. So.
Not only do we have flexibility in those baskets that you're referring to quite a bit but it's really around the borrowing base amount. So.
That provides us a lot of cushion and in the fact that were $210 million above the actual credit facility amounting to eight five to two.
Six for obviously is a cushion that was that we can capitalize on as well. So we have quite a lot of leeway in being able to do asset sales without impacting liquidity.
Thats you then it didnt take assets another so the borrowing base.
No.
Those were already existing.
Asset buckets, and we just we put in a mechanism.
That not only asset sales now we can offset it with any further hedging our further PDP wells that come on.
Over that same timeframe. So there's there's a interesting mechanism there that nets those values from the hedges and the PDP wells against any asset sale. So that was a have a nice improvement.
And I noticed I think the value of day I'm isn't that as well.
Right.
Now the Deconsolidated.
Her it's our first credit affiliates deconsolidated so.
Hmm shares are pledged underneath that credit facility, so any sale would count as an asset sale.
Got it.
Yes.
You bet I think there's some in both personally sensors mention of.
Valuating sure returned to shareholders through dividends and share repurchases.
Hey, it seems like what we've talked about him because you're comfortable what's your leveraging your liquidity.
So.
Are you speaking about that today, each potentially changing your return to shareholders or.
Just a general statement that you're making just as a.
Part of the.
What you what you can tell investors could happen, but not necessarily in there right now I think you hit it on the first part we feel good about our position where are out with our liquidity and balance sheet and knowing our.
Sponsors plan, and so we which kind of impressive that am connection provide guidance on mostar withdrawing their guidance. So we're in good shape and we feel good about it but with that said, we're kind of unchartered territory around this cobot 19.
We think we have a lot of visibility in our plans, but we just wanted to flag. The there's obviously a lot of uncertainty in the market. So.
Like we always do we sit down with the board every quarter and assess where we're at and we'll do the same this next July and.
We'll know a lot more than but right now we feel good about it.
And last question Korea, the the Clearwater facility I know, there's a lot going on right now the world and I'm curious if there's any developments on potentially capturing some value from that.
Now we don't have anything I think you saw update where in litigation with then we'll pursue that vigorously but.
Outside of that which has been shut down and we shouldn't really have anymore.
Facility expenses with that maybe a couple million for the remaining nine months, so that should really tail off which will.
Help profile as well.
Okay well.
Thanks for a given us all your time over these last two calls guys I appreciate it.
Yeah. Thanks, Greg.
Our next question comes from that Berom off with Wells Fargo. Please state your question.
<unk>.
Hi, Thanks for taking the question could you could you maybe elaborate a little bit more on the joint effort by a are an A.M. to mitigate NGL storage capacity issues in the northeast maybe if you can talk about some of the initiatives you're pursuing to ensure that do you have ample storage capacity. After this.
<unk>.
Okay.
Yes. Good question. So we have our storage at the street in the field level at the pads and that compressor stations and alike.
We also.
And you know Antero resources has been able to market its volume at other locations along the Ohio Valley on the river and so we've had physicians in a in facilities along that that corridor, where there and have.
And able to secure capacity at those facilities.
But that's really for the oil piece on the NGL side, Yeah, there's really been no.
Challenges are really speak of around moving Ngls here over the last couple of months.
There is a significant amount of storage capacity at Marcus Hook.
You know some several million barrels of propane as well as some underground storage on top of that but.
You know vessels continue to come to that facility given some of the geographical advantage as it has and so we've seen no no challenges on the NGL front.
Or a reason to go out and secure additional NGL storage capacity at this time.
That's helpful. Thank you and then maybe a just a housekeeping item or could you quantify the percent of revenues that are derived under.
Minimum volume commitment contracts, which I believe relate to the high pressure gathering and compression assets.
Yeah, I don't have a number for you like you mentioned that 70, 75% for compression and high pressure and in the south of 70% on the processing.
JV so.
And those were four.
The compression in high pressure for or projects after post the IPO.
So it's not quite that much but those are the nvcs, we have and we don't have many MPC volume is fairly depressed number.
Got you that's all I had thank you.
Thank you.
Our next question comes from Ethan Bellamy with Baird. Please state your question.
Hey, guys. Good morning, you've got a few player.
Is there a bogey that they are in terms of asset monetization or.
And then the 20 ones are the 20 twos, where am would be in a position to pay a more sustainable yield.
We have a 900 million dollar bogey it a our but that doesn't really influence the yield at all for am I am looking at the underlying fundamentals the cash flows.
But they are does have a 900 million dollar at the top end as are the range, which.
It's not needed at all really for the 20 ones and 20 twos, just generally to get the leverage down into the low two times.
Just keeping the distribution at the dividend today and where it is.
Imply you think the stock price out a double or triple from here then to make you more.
More reasonable cost of equity.
Yeah, we don't really lose look at the markets for that.
Yeah. That's for you to say I think Ethan, but oh like the way you're thinking.
Okay.
Have you seen any international LNG buyer or middle men trying to bottom there's a market here.
No.
Well you know we have our firm sales at Oh.
Oh point at Sabine pass and at Freeport and a those weve.
Not seen what you're talking about you know that cargoes.
Sale as for the schedule and the buyers are there and so have not seen any hesitation art.
Interruption in the plan schedule.
Okay.
I think that you guys are probably good in the short term all all the permitting work for infrastructure, particularly with the slowdown, but do you anticipate any sort of.
Medium or long term problems with the Army Corps of engineers and permitting issues.
No not at all we have a really good relationship with the permitting regulatory agencies, both on the federal and state level and we we like olive oil and gas in West Virginia in Ohio are considered.
San show in the context of Cowen 19, but where we're also just important as a you know as an activity basin employment based tax base and so.
They are important to us were important to them and haven't seen any permitting slowdowns or hang ups.
And last question do you guys have any insight on the timing of any tractor, where you're the anchor shipper.
Nothing that we can say at this time.
Okay. Thanks, guys. Good luck.
Thank you.
Our next question comes from Chris <unk> with Barclays. Please state your question.
Hey, guys. Good morning, I guess first from me would be.
Can you just provide a quick update on the build out it's Nick but given you know what looks like now possibility for entering maintenance mode in 24 and beyond.
Yes, we have two plants plan. The first one comes on intending to share the second one next year.
Oh, okay.
Okay, but nothing beyond that I mean, I know that at one point you had said there you know it's possible I think up to six but at the moment.
Right right.
Right now we only have not over the next couple of your gas right.
Okay. Okay. Thank you and then.
Meaning more of an A.R. question, you know gas prices improved pretty materially or over the last month or so if things continue to look better through the remainder of this year and into next year.
Do you think from our perspective, they might look to take advantage of that and produce more or is it a situation in which you know me, maybe you're happy with the production plan and we'll just harvest.
The cash flow to repair the balance sheet.
Yes, I think the latter we're quite capital disciplined and I don't plan to flex with a move in commodity prices in the in that certainly not the next year or two.
Okay.
That's it for me that thanks, guys.
Thank you thanks, Chris.
Ladies and gentlemen that is all the questions. We have for today I'll turn it back to Michael kind of any for closing remarks. Thank you.
Thank you for listening to our first quarter conference call. If you have any further questions. Please feel free to reach out to us. Thanks again.
Thank you. This concludes today's conference all parties may disconnect have a great thing.