Q3 2020 Earnings Call
Good day, ladies and gentlemen, and welcome to your evolution Petroleum third quarter fiscal Twentytwenty earnings release Conference call.
All lines have been placed into listen only mode and the floor will be open for questions. Following the presentation. If you should require assistance during the conference. Please press star zero on your telephone to reach a life operator.
This time it it's my pleasure to turn the floor over to David Jones, Chief Financial Officer, Sir the floor is yours.
Thank you and good afternoon, and welcome to evolution Petroleum's earnings call for our fiscal third quarter ended March 31 2020.
We will discuss today operating and financial results for the quarter.
M., David Joe Chief Financial Officer up evolution, and joining me on the call today, as Jason Brown, President and Chief Executive Officer.
If you would wish to listen to a replay of todays call. It will be available shortly by going to the company's website for recorded replay until June 7th 2020.
Please note that any statements and information provided today, our time sensitive and may not be accurate later date.
Discussion today will contain forward looking statements of management's beliefs and assumptions based on currently available information.
These forward looking statements are subject to risks and uncertainties that are listed in described in our filings with the FCC.
Actual results may mature differently.
Differ materially from those expected.
Since numbers are readily available to everyone in Yesterdays news release this call will primarily focus on key results.
All told me an old prices, how that affects the company Kobe lighting.
And our typical update on operations and on plans for the remainder of fiscal 2020, including capital spending.
I would not now like to welcome.
Jason Brown on the goal.
Thank you David.
Good morning, everyone again, thank you for joining us today for evolutions third quarter fiscal 2020 earnings call I'm speaking with you today in a dramatically different environment.
And last quarter.
Did you all know when are we marched crude prices declined sharply as a result of multiple significant factors impacting supply and demand in the global oil and natural gas markets, including a global pandemic caused by cobot 19.
With regard to covert 19 first I would like to.
Say that I hope all of you were staying safe during this pandemic and wish you continued good health.
Second I would like to take this opportunity to think my employees Board members and partners for their ongoing dedication that this company.
Acted quickly and remain diligent during these trying times.
<unk> really well many are balancing additional responsibilities with their families due to closures of schools in day care is another adjustment to everyday life like all of you. We've spent the last few months adjusting our business at home life to the impact to cope with 19.
Early in February 2020, the company began procuring preparing for potential impacts on its business [laughter] focusing on the company's ability to maintain its operations and system of controls remotely.
Happy to share that we were.
Maximizing our remote wherever possible and our employees are effectively collaborating virtually given the small size the nature of our company. It was a fairly seamless transition.
To our operation and one that we were able to do and continue to be fully functional.
Over the years, our company has been able to withstand the impacts of economic slowdowns sudden or extended period.
Volatility in commodity prices within the oil and gas industry and global disruptions. Unfortunately, we've never had to operating environment in which all three occurring simultaneously.
We expect the price of crude oil to continue to be depressed and remain volatile at least through the near term as evidenced by the current crude oil futures market.
Although we cannot predict the duration or effects.
This sudden decrease.
We have for parents ourselves for the potential that crude oil prices may remain depressed for an extended period.
The nature of Cobot 19, pandemic makes it extremely difficult to predict how the company's business and operations will be affected long term. However, the likely overall impact of the pandemic is viewed as highly negative to the general economy, especially to oil and natural gas industry.
Well the environment has changed and we'll continue to evolve in many ways. We cannot predict evolution has again delivered earnings and positive cash flow for its shareholders for the 16th consecutive quarter.
On April 620, 20, the company entered into a Nymex W.P. <unk> oil swaps covering 1400 barrels a day.
Or approximately 42000 barrels per month.
A substantial portion of the company's anticipated oil production for the period of April 1st 2020 through December 31st of 2020.
Fixed swap price of $32 a barrel.
Although evolution does not typically employee hedge hedging strategies. The company believes that this parcel <unk> price protection will enable it to maintain its current financial strength and allow it to continue to look selectively add to it existing asset base through the combination of cash on hand and availability under its credit facility.
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The company has paid 26 consecutive quarterly dividends with the previous nine at a rate of 10 cents per share well the long term strategy towards the dividend remains unchanged. The board of directors believes it is prudent to temporarily adjusted <unk> quarterly dividend rate, two two and a half cents per se.
Here in the short term this change will go into effect in the quarter ending June Thirtyth 2020.
This corrective move is being done to maintain the cash balance should the challenge challenging circumstances persist beyond just the next few months the economic slowdown and the cobot 19, Penniman pandemic continue to evolve.
Maintaining the cash position also allows the company greater flexibility as both management and board of directors believed to current market conditions could create meaningful M&A opportunities to grow the company.
The company continues to reward shareholders with more than a 3% yield at current stock price. The long term plan of distributing a substantial portion of the company's free cash flow in excess of operating capital requirements through cash dividends remains a high priority.
Overall financial strategy and the company expects to return to higher dividend levels. After the industry's emerging from the current market turmoil and to continue to increase dividends over time as appropriate the cash dividend will be paid on June Thirtyth 2020.
The common stockholders as a record on June 15th 2020 with that I'll now turn the call back over to David to run through our financial highlights and then I'll wrap up the call speaking briefly about her strategy and outlook in the M&A landscape, David Thank you Jason.
I also would like to read I reiterate that I hope you in your family's remains safe and well during these challenging times.
I will share some additional highlights of our financial results for our fiscal third quarter ended March 31. However, please refer to our press release yesterday for additional information in details for the full fiscal third quarter and look out for our form 10-Q to be filed shortly.
In the quarter the company generated net income of $3.7 million, yes, Jason Nobody marketing a long consecutive streak of positive reported net income inclusive of a onetime $2.8 million income tax benefit related to enhanced oil recovery tax credit.
The company generated cash flows from operating activities, a $4.1 million in the corner.
The company also paid.
26 consecutive quarterly cash dividend declared the next dividend.
A couple of maintained our strong balance sheet with 20.7 million in cash on hand.
And an undrawn credit facility and no debt.
And lastly, the copper company entered into Nymex WT T. I'm, all swaps covering a large portion of our production for the next month at a fixed price of $32 per barrel.
Diving into a little more details total revenues were 7.7 million for the quarter, which generated 3.8 million income from operations.
Lower average realized oil prices was it was the primary driver of the decline in revenues when compared to the prior quarter until a lesser extent lower sales volumes adelheid offset by a full quarter of Hamilton don't production due to the effective date of the acquisition in the prior quarter.
[noise] Dell hide average oil price was down 15% to about $47 per barrel. This is inclusive of an l. less premium in the quarter of about a daughter and 49 cents.
Offset by one last month of temporary trucking charges for the planned repair to a section of the old sales pipeline.
Called the pipeline repair project commenced in mid November was completed ahead of schedule in late January and all del high all sales are back through pipeline as of February one or 2020.
Yeah, Hi revenues per be are we in the quarter was about $41 per barrel and the idle high field operating margin for belief was about $24 per barrel.
Total net production and barrels oil equivalent per day increased about 2% to 21 64 be OE PD in the current quarter compared to 21 24 in the prior quarter.
This increase is attributable to a full quarter production from Hampton don't feel compared to the prior quarter offset by lower production Adelheid due to not limited to deferred conformance work overs reduced she'll to purchases and natural decline.
Production cost were 3.9 million in the current quarter, a decrease of 8% from <unk> point 2 million in the prior quarter during the quarter.
Evolution was further impacted by the temporary closing of the CEO to supply line to del high which the company has no ownership interest.
The pipe I was taken offline in late February due to a discovery of pressure lost detection.
The operator is working on repairing the pipeline and has not yet determine an estimated date of reopening the pipeline.
However, the recycling facilities are operating as usual and these facilities provide approximately 80% of the injected seem to going.
The Dell high CEO to cost decreased in the core current quarter My point $6 million were 43%.
Purchase CEO to decreased from 83.6 million cubic feet per day to 53.9 million.
Cubic feet per day.
So contributing to the decrease was a 15% reduction and highs realized oil prices associated with its production.
Slightly offsetting these decreases was <unk> point 2 million dollar increase were 9% and other production costs, primarily due to the inclusion of a full quarter Hamilton dome operations.
The company's overall lifting cost per Boe in the quarter was twice, what $19.56 or BLE it 10% decline from the prior quarters $21 and 67.
It's Kirby always.
[laughter].
General and administrative expenses being increased $8.1 million or about.
2.1% to 1.5 for the current quarter compared to the prior quarter.
Increased DNA expenses are primarily attributed to slight increases in the company's professional services expenses.
Have a evolution continues to operate as a lean organization, especially for public company, having only for Fourq for full time employees.
Nonetheless, we evaluated areas, where we could potentially a cheap cost savings. This is an ongoing process, but today, we have less initiated cuts primarily with third party contractor personnel.
We see that as the validation of our flexibility in our strategy of maintaining a small core team of employees and utilizing third party person now when required and able to pivot if necessary during volatile price environment.
In the quarter, we recorded a onetime income tax benefit of $2.8 million for enhanced oil recovery credits taken in tax years, 2018, 2017 and 2016.
This was the result of a project in search of tax savings opportunities over the last few years and included amending federal and state tax return for multiple years.
Resulting in an income tax receivable $3.2 million <unk> period.
The somewhat obscure tax credit is only applicable to owners of qualified equal our projects.
Furthermore, from 2005 to 2015 does your credit was not available I'm with phased out because of higher oil prices a set by the Iraq.
Your credit is phased out again in 2019.
Determination has not yet been issued by the IRS for 2020.
Overall net income for the quarter was $3.7 million or 11 cents per diluted share.
110% increase compared to the prior quarter up $1.8 million.05 per share.
In the current quarter, we incurred point threemillion of capital.
Projects, consisting of capital for projects that the Dell high field, primarily for NGL plant and completion of a water curtain project, we do not anticipate any material net capital spending for the remainder of fiscal 2020.
And all remaining conformance and capital Workover projects have been delayed based on recent decline in oil prices.
We don't high operator, previously reported that capital with deferred for the phase five development project into at least 2021.
Our working capital increased 1.4 million from the prior quarter to 23.1 million.
The increase in working capital is largely attributable to the income tax receivable.
Resulting from the Youre credits previously mentioned offset by a decline in wholesales receivables due to the lower average realized prices.
The company ended the quarter with 20.7 million in cash no debt and an undrawn credit facility.
On April 27, 2020, the company completed its annual spring reader Redetermination and as expected the redetermination of the borrowing base decreased from 40 million to 27 million, primarily due to the steep decline in oil prices.
In the current quarter, we did repurchased about a 150000 shares at an average price of $4 in 80 cents totaling about $733000.
<unk> remains approximately $960000 left on the previously approved $5 million stock program.
In summary, despite the current economic environment facing our industry evolution reported yet another solid financial quarter, all the while remaining committed to returning cash back to our shareholders with our 27 consecutive dividend declared.
The company remains in excellent financial shape is poised for new growth opportunities.
Additionally, our mark to Mark hedge book value was $2.5 million as of March 1st 2020, including a realized gain of approximately $642000 for the April.
Settlement.
This concludes our review our financial results and operations for our third.
Well now turn the call back over to Jason for final remarks.
Thanks, David.
The company remains well positioned to whether the current and future market conditions, while maintaining a strong financial position to capitalize on new growth opportunities.
They will contribute to our ultimate goal, providing return for shareholders. The company is working with his operating partners to review lifting cost cost on a well by well basis.
Basing shut in decisions on wells with low or temporarily negative netbacks, while retaining operating flexibility were to return wells the services realized prices improve.
Company is continuing to monitor the oil price environment and is working with its operator operators the plan accordingly for various scenarios.
We believe the current weakness in oil and gas prices presents an opportunity to acquire long life production with upside potential in a very attractive price will be OE.
I think it also validates evolutions prudent decisions over recent years to retain substantial liquidity with little to no debt.
We will provide the diversity long term sustainability and support and grow our dividend.
Lucian is uniquely positioned to pursue growth opportunity.
We will look to take advantage, where the market allows us to evaluate asset acquisition opportunities.
Further grow the company.
With that I think ready to take questions. Operator, we preserved please open the line.
For question. Thanks.
Yeah. So far is now open for question have you would like to ask a question. Please press star one on your telephone keypad to join the queue and if you're using a speakerphone. Please pick up your handset to provide the best sound quality.
And we'll take our first question from Jeff Grampp with Northland. Please go ahead.
Morning, guys.
For now.
Hey, I'm definitely Jeff.
Was a I was curious given I'm sure things are fluid and probably hard to get.
Handle on but production over the next couple of quarters, you know understanding that there's some real time decisions on shutting in particular wells probably a both your assets then there's some reduced C O two volumes with the pipeline so.
Got a ballpark high level commentary kinda give us in regards to production expectations or maybe what kind of magnitude in terms of shut ins you got you're seeing in the field.
[noise].
Well, Jeff would we generally don't give guidance I think we've we've seen a little bit of a hit so far between adelheid CEO to win.
And the Uh huh.
Oh the pipeline a issues in basically lack of conformance you know we've been very successful over the last few years.
A flattening the the natural decline natural decline, there's probably in the eight ish percent range and ER Denbury has been very successful flattening that decline to zero or even or even negative decline increasing production.
So without that conformance I think I think that kinda tells you where that's going to be naturally this cotwos, probably another bit of hits I think collectively between those two net to US maybe about 100 150 barrels a day.
And a in a hamed.
You know, we're just we're really pleased with that acquisition.
No acquisitions are good enough price environment, but we.
We just couldn't be happier with that operator, there just they put together an excellent team up there they've been doing through in their their dialing back production a little bit on some of the wealth of don't make sense, it's a little bit different operational issue up there.
Most of the wells being pumped they've had electricians are looking at a the actual power usage.
Well by well doing very detailed analysis, so because powers one of the largest expenses up there. So you know right now I think we're we've probably shut in about a 30% to 40% of our production at him down which is you know about 8% of our overall production for the company. So it's a it's less significant but the.
There is the kind of get to cash flow neutral.
Situation, even at a $10 realized prices so.
We're happy with both operators in this and this time, though I was one of the lowest lifting costs fields for Denbury. So we don't anticipate any substantial.
Cut backs or shut ins, there's no intentional shut ins that it denbury in both situations.
We've got no indication from either operator that any of the midstream partners, if they've talked about curtailment or shut in so there's a difference between curtailment and shut in you know shut in is choosing to do that based off of.
You know the economics of individual wells curtailment would be a midstream, saying, we can't take your oil which is kit happening in some cases, neither either which are fields are having that issue.
So I think that's probably because I can get to answering that I think roughly were about probably 10, 10%, 10% to 12% down right now.
Got it that's perfect my follow up kind of I'm, a little bit a housekeeping or clarification on deep sea or two volumes and how the contracts structured with with Denbury with the with the pipeline effectively shut in in the near term debt easier to volumes that you guys report on your financials does that go to zero.
Or does the recycled volumes kind of count towards the injection that you guys effectively paid.
Statements.
Yeah, Jeff. This is David so that's that C. O two number that advertising our results of operations, that's up I purchased feel to volume not a recycle volumes. So you'll end the current quarter, we have a lower number because in the current quarter. We did have some purchase volumes up to the point of I bunch up.
Shutdown, which is around February 22nd so so yes, it's a zero in March and then.
So far in April.
That makes sense, we were purchasing about 83 million today in January and most of February and then zero Mark. So we're not purchasing anything right now, which it turned out to be a little bit of serendipity, it's it's a tremendous savings.
You know if you think about the.
For us so we purchased about net net evolution about 20 million cubic feet today and that's.
Ballpark between the conformance and the purchase of CEO to both of which you're kind of on hold right now of our 19 dollar lifting costs. It makes up about $9 of it so with the with no future purchases were still cycling the 300 million today injecting 300 million today of recycled that's still fully functional.
But just not adding the additional 80 or so you've seen a little bit of of pressure support drop off from not the full 380, but doesn't even remotely compare to the costs. Even at this point at these prices. So we're we're kind of okay with that right now.
Yeah, no that's a nice embedded hedged to have.
Application, there and Oh <unk> <unk>.
Thanks, Jeff.
And next we'll take a question from John Wayne West Brom. Please go ahead.
Good afternoon guys.
Good afternoon John.
Right up on Monday, we read that we appreciate that.
Well I'm glad you got it and as I broke in that no I.
Ready to suspend the dividend in its entirety. So you surprised me.
By paying a dividend although it was reduced you paid a dividend and.
I think it reports a confidence you haven't your and your balance sheet and then your cash flow.
It does you know we we are we also were able to put in a hedge and the board you.
You know we were just so committed to that dividend returning value to our shareholders.
And we have we have shareholders that have us in dividend fund.
It's just important part of our brand in our commitment and we're very proud of it we we've had to lower before back in 2015 16, Oh from other situation price reduction what prices a drop of I think 57% at the time and it was down from 10 cents down to five cents a quarter I think for six quarters or so and then.
Quickly ramped back up to 10 cents. So we're pretty committed to the 10 cents or a quarter, but.
But but only if it's if it's prudent and I think in this situation. We're really excited about the potential of M&A opportunities, but still being able to glut deliver quarter I think if these prices is still a decent yield.
It's still rewarding shareholders and in our target is kind of.
To preserve our cash we felt like we could do that.
I think you struck a nice balance there. So I think you had.
David I admit it's a nice although it's one time.
That enhanced oil.
Benefit is nice and I Miss.
Your comment when you start working on that.
Oh It was a November December last year, we started doing some work on that.
That's 29 cool.
<unk>.
Yes.
Okay, well, thanks, a lot and.
Appreciate you taking my question.
Thanks, John.
Operator, we'll take the next question if there's one.
Oh, please hold I've got a note from the operated at her line looks like it dropped.
Okay.
Sure.
I think we have a couple more questions. They are wonderful just bear with US I think the operators got dropped and is now logging back on.
I apologize I am sorry, I'm back and our next question comes from.
Bots hockey Puck, Bonnie with Alliance Global Partners. Please go ahead.
Good morning, guys. Thank you for taking my question.
Hey, Bhakti.
Oh my.
My questions have been.
But just curious on the dividend it's nice to see that you know you are continuing to be dividend.
At this time just was wondering when do you expect or audit what oil price would you expect to go back Oh, no dividend payments up do you have pretty good levels.
Well I eat I.
It's kind of hard to say, it's more of a feel if when we can sustain it for a while we don't want to just go back up and and then have to go back down again and so.
So I think that are generally a we're we're kind of fully cash flow positive, including the dividend around the $42 range. So that's you know our lifting cost or.
When prices of oil it kinda varies a little bit when prices were 50 bucks or so you'll see prices are a little bit higher and and like David said, our or lifting costs were went from with prices going down went from $21 down to 19, and we expect them to be sub 15, right now so I.
I think this was just a prudent decision a with a tremendous amount of uncertainty we it's our strong desire to get back there as soon as possible. So hopefully this is just a few quarters and we can all bounce back from this and ramp up demands, but we had to be prepared to endure.
A few quarters.
So.
Okay.
That's that's great color.
Just one more on the M&A I know, it's not a very good time to be in the market selling assets.
But how do you see any kind of you know lucrative opportunities open up a you know given you have healthy balance sheet Oh, that's a good idea facility are you seeing anything in the market.
Did you have enough.
What we need is their prices to source. It stabilize the volatility has just been something that nobody has ever seen.
So even if they stabilize in the 30 range for a while people who will then start trading.
Nobody is going to really do a deal until until that can be some valuation put on something even if they are hurting we're starting to see some bankruptcies, we're getting inbound calls from industry contacts even on smaller situations where creditors are.
Being forced to make some decisions and maybe step in and we want to be a solution for for that so we're we're seeing some conversations I think probably those will get kinetic a in the more three to four month range.
Rather than the three or four week range that's.
Decent perspective.
Okay. That's fair enough. Thank you very much guys subject from my side.
Thank you excellent.
And as a reminder, ladies and gentlemen, if he would like to ask a question. It is star bond at any time to join the queue.
And next well go to John Bair with ascend wealth advisors.
Thank you I was going ask some questions about M&A, whether or not.
A year being approached or actively right now but given.
The environment I think you addressed it pretty well this good prices need to kind of stabilized.
Probably probably trying to figure out how to hang in there right now but.
But nonetheless, I am curious whether or not you are.
Getting a frequent inc. a in inbound calls and whether or not there some opportunities in Hamilton down if I recall you had previously indicated there might be able or a potential to pick up more interest in that particular area unless I'm wrong.
[music].
Certainly oh, yes, definitely getting inbound calls and a number of different situations. So I'm interested in and taking back stock, which would be interesting to us probably the board doesn't feel like at this point, that's that's a little too expensive in terms of where we feel like we're undervalued at this point, but at some point it makes sense maybe to do.
Yeah.
Little bit of that <unk> between a caching and our Undrawn revolver, we feel like we're we're poised to be able to take advantage of there's opportunities in terms of him dome I I think that's a real possibility we'd love to have some more of it. We're just we're very pleased with that acquisition I think our shareholders are gonna be very please.
With that acquisition and you know of all through the Twentys and 2035 or when it supporting our dividend 15 20 years from now it's a it's such a long way I feel we'd love to have some more of it but that being said that they're not motivated to sell in this type of price environment and it's a little tricky right now John with.
How do you do a deal because not many things or even pick cash flow positive. So can you buy something kind of remain neutral for awhile.
Or cash flow breakeven in and get in collect those reserve for later I think role just kind of scratch your head trying to figure out how to make a deal but well.
We're pretty confident we'll be able to get something here pretty soon.
Okay, and then a with regards to the hedge I guess, yeah, obviously.
Like that's good through the end of it and does this year at what point would you consider.
Laying on some more hedges again, I I realize its price dependent.
But kind of the scenario that you would see <unk> stable prices I mean, obviously if things are.
Rebounding, a little more strongly than what's perceived to be likely to happen. So many unknowns out there as far as economic recovery and so forth but.
One of your thought process on what would cause you to consider laying on some more hedges, saying 2021.
That's a really good question, it's one that we're watching very closely.
The main thought that I would want to extend their is.
The we think of hedges is isn't insurance it or more of a defensive policy rather than one a speculation. So I think the board feels at this point getting too far into 2021 starts to be little more speculation you know.
I I think we feel like we've got some time to look at that a you know we.
We just don't know which way. This thing is going to go if things start to ramp up obviously, everybody is kind of biting it's a bit to get back to it and and we start the economy and there's a lot of motivation that way, but everybody has to also be prudent and.
Is there potential second wave I think we believe that it's going to take awhile to get demand back up to where it was we have seen.
Very positive reductions from producers that that's happening faster than people have predicted so that's that's gonna be good to get a balance.
The tremendous amount of stimulus that there's just so many factors there, but it's got to get back up to demand and then once it gets back up the demand it's got to cut through in and out demand has to outpace production a long enough to debone drove the storage it feels like that's probably going to be at least.
For the first half for 21, so we're definitely eyeballing 21, but where we don't feel like if we feel like it's just a bit speculative at this point.
No I didn't mean to imply that you would be.
Currently looking to lay on hedges in 2021, but as we get deeper into three this year, you know kind of at what point and I didn't mean to imply that you were looking at it from a speculative standpoint at all.
Realize it is more of a defensive measures so.
But yeah I was just kind of curious if you know kind of what.
And at what point, you might or what the conditions might be that you would consider.
You know doing that as year goes on so it's a wildcard it's a watch I know many variables out there right. Now. So you know the is I mentioned before with the with a bucket <unk> question.
$32. The reason, we saw an opportunity there to to the to sit in that price for substantial portion. After our production is what kind of healthy you know were we don't have the full access to be paying the full dividend at $30 a barrel, but we're not hemorrhaging a bunch of money and we're not we're not a we're able to protect our financial strength.
So that that's going to be a deep part of that consideration. If we start looking at 2021, the board's got until September Oh wait or next board meeting thatll be when we.
File RK I at our fiscal yearend.
And sorry, I think we would we would probably want to have be looking pretty heavy at that point and maybe sometime before then again with that I have a defensive posture for 2021, if we could be somewhere there where we could support this quarter, a two and half cent dividend quarterly dividend and preserve.
Cash, but hopefully we'll be into new assets at that point and it'll be a whole new picture. So we'll have things to consider.
Well I would imagine all so there's some aspect as to your.
Uh Huh, [noise] denbury and what there.
Potential.
Activation or activity could be and in further developing.
Ally and obviously, that's a that's a whole different ballgame there so.
Well of course, we're not going to.
Speculate about Oh, <unk> family of great relationship with them in and of the comp contact or their or their management has expressed to me I know there correct, they're cutting back on some of their production, but their their heads pretty well through the rest feared.
And they've indicated the Dell has one of their lowest lifting cost field. So it's it's not going to be the one that's a let's cut back. So that's that's good news for us.
Hi, Matt I'm minutes from the standpoint, a developing further areas there.
Yeah, that's it sounds like that likely been Ingrid patches, but at the deferred yeah, yeah pushed back to 2021 again, but.
And we saw a little bit of that that now is David said production went up a little bit a even though del <unk> went down and that's that's kind of the point of handle filling in some of that wedge and we hope to.
Continue to add to that.
Very good. Thank you for taking my questions, Yeah, Doug I'll be safe.
I appreciate it.
Yeah.
Before we move try next question here just another reminder, if you do have a question or comment. Please press star one on your telephone keypad at any time.
And we'll move next to rich hardwired with boiling point. Please go ahead.
Hi, just a rich could you give us a could you give an indication.
With December crude.
<unk>.
At around $30.
Have we basically locked in the rest of this year.
And about where we were in a where we'll be in the in the June quarter.
Regardless of the crude price.
Mm.
Yeah, well, we locked in like 1400 barrels a day for the it's a financial hedges, though so we're going to get if right now the forecast of oil is like you said 30 in December the forward curve, so that would have us a in the money.
Per se on the hedge for the entire balance of year.
For 1400 barrels a day, which is.
A substantial portion of our oil production Oh, we will be getting.
The difference between Devry T.I. in 32 is it make up so it's effectively we'll be getting $32 a barrel.
Regardless of what the price of oil is.
For the remainder wanting 20, but the point I was trying to get out as.
Our chance to really improve the situation.
For the company doesn't come until 2021 with a higher oil price.
Correct.
That's right.
Well I'm happy with that.
That's fine. Thank you how it gets it it's yeah, okay great.
[noise] no further questions I'll turn it back over to GE same brown for any closing remarks.
Well. Thank you for your participation on today's call. Please feel free to contact me or David with any other questions I look forward to providing you with an update in September.
Thanks, everyone.
And that does conclude today's teleconference. You may now disconnect your lines and have a great day.
[music].