Q1 2020 Earnings Call
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Hello party made. This is the conference operator speaking the Goodrich Petroleum. First quarter conference. Call Will begin momentarily. Please continue to wait and we appreciate your patience. Thank you.
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Good day and welcome to the Goodrich Petroleum, first quarter 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance. Please take note conference specialist by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions to ask you a question. You may press the star then one on your touchscreen phone to withdraw your question, please press star into office. Please note. This event is being recorded now like to turn the conference every to kill Goodrich chairman and CEO, please go ahead sir. Thank you. Good morning. Everyone. Thank you for participating in our first quarter 2020 earnings call this morning, like almost everyone else in the world. We have adapted and adjusted our procedures and protocols and response to the covid-19 lockdown. We have successfully managed through the past couple of months with little to no impact on our operations or performance in addition our Haynesville. Shale natural gas focused strategy and hedge position his
Almost completely protected us from the recent crash and crude oil prices with our first quarter production mix being 98% natural gas and approximately 60% of our first quarter crude oil production protected by Hedges at approximately $60 per barrel.
We are seeing the impact of the Cradle sell-off including dramatic reductions in oil directed rig count activity as well as crude shut-ins which are reducing the amount of forecasting not associated natural gas production. This in turn has resulted in significant Improvement in the forward-looking strip prices for natural gas since we last reported to you in early March with calendar year 2021 strip price is now trading at approximately $2.70 per mcf at the same time the Steep Decline and counts as leading to materially lower bids for goods and services across the board including rigged Pipe & Frac spread rates, which cumulatively are reducing our Average Joe forecast and completed. Well costs by approximately 15 to 20%
the combination of the
For capex cost and improving natural gas trip prices as it's encouraged and expecting we will be achieving even more compelling Returns on our capital in the second half of the year and in 2021.
Currently we're in the process of releasing the rig that we have had under contract and plan to take an approximate two-month break before resuming billing operations. Again, this scheduled as part of our overall strategy and plan to remain in maintenance capex mode designed to keep production levels roughly flat while generating significant free cash flow. Well, this is our current plan we maintain the flexibility to increase activity levels and resume a higher rate of growth at such time as market conditions dictate and our board of directors believes that that is the best way to provide the best return for our shareholders. We have again prepared a slide presentation and we invite you to follow the slide deck during our prepared remarks. You can access the slide presentation on our website at Goodrich Petroleum and see entitled under presentations 1q 2020 earnings wage.
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I will now turn to slide presentation. For those of you who would like to follow along in our standard disclaimer disclaimer forward-looking statements and risk factors are highlighted for you on flight to
oh, so I three we provide you a certain specific data regarding our environmental social and governance statistics. We plan to continue to share this information with you as well as to update as long as conditions and best practices R evolved over time.
We have again included an overview of the company in our assets which highlights our core Haynesville Shale position in Northwest Louisiana where our inventory live currently stands at approximately 16 years are Northwest Louisiana Angel inventory alone contains over one TCF of natural gas resource potential. We're both company and ended up development has the rest our position.
The company's total net production grew by 32% compared to the first quarter of 2019 and down slightly sequentially to an average of 137 million feet of natural gas and equivalents per day in the first quarter as we try to maintain roughly flat production quarter-over-quarter. We expect quarterly production May Flex wage based on the timing and completion Cadence as we add Wells which typically have relatively High working interest and very robust early time production levels.
Performance from our refined completion designs has led to average reserves per thousand feet of lateral of 2.5 BCF which coupled with lower caps and very low l l e l o e is already attract are already attractive rates return or on track to get even better.
We are calculating and updating each quarter. I return on Capital employed or r o c e which was approximately 12 and a half percent in the first quarter.
Despite very weak natural gas prices in the first quarter where we had realized prices of a dollar and $0.73 per mcf and roughly flat production volumes. We never left reported ebitda for the quarter of 16.6 million dollars.
Moving to slide five we show our year end 2019 SEC proved reserves of 517 bcfe which has a present value of just under $300 billion dollars using SEC mandated pricing and discounted at 10% as you will see from the pie charts are proved reserves are almost exclusively natural gas and replicated without Court Haynesville Shale position at 6. We have updated our cap table as of the end of the first quarter as of the end of the quarter we had total net debt of $106 billion dollars or approximately and approximately $93 million outstanding under the senior credit facility, which is the same amount that was outstanding as of the end of last year.
A bank group has recently completed our spring borrowing base redetermination, which resulted in a slight 4% reduction from $125 to $120 due to the adoption in natural gas prices.
In addition we were able to extend the maturity of our second lien notes from May of 2021 to May of 2022 with no other changes to the terms and conditions of the notes the balance sheet remains in very good shape with net debt-to-ebitda at the end of the first quarter of just one point three times.
That's why seven we show our annual growth in that production volumes over the past several years, including the midpoint of our guidance for 2020 of approximately 140 million cubic feet per day. As I said, our current strategy and goal is to roughly maintain current production levels for the balance of this year with a significant reduce capex program.
Moving a slot 8 we have updated our hedging summary which shows the volumes tight and prices of our current natural gas and crude oil hedge positions as I mentioned on our last quarterly calling watching the markets very closely and routinely evaluating our hedge position our position continues to provide us excellent protection from the current low prices and dead 9.1 million dollars in gain in the first quarter of which six billion was a realized gain in cash receipts as you can see we are well hatch throughout the balance of this year where they combine $70 million cubic feet of gas hedged with a blended average for price of $2.60 per mcf.
in addition we
Recently took advantage of the significant Improvement in the longer-term strip prices for natural gas by adding to our calendar year 2021 and early 2022 positions with the reason hedging additions. We now have approx 40% of our current production levels hedged throughout 2021 at a blended average price approximately $2.55 while we expect natural gas prices to improve from here. We believe the current hedge position is prudent and provides appropriate downside and committed for our shareholders.
Finally, we provide details of our current 2020 guidance on slide nine, which as I said provides a roughly flat production profile off like focus on free cash flow generation on a capex program with the midpoint of approximately $45 million dollars, you'll see that our 2020 plans will be heavily weighted to the deputy J Street position where we have had great recessed but success in our drilling operations and well performance why we will really combination of 4675 hundred thousand ten thousand foot hangs will laterals are estimated little bit Aggregates lateral length for 2020 is approximately 8500 feet.
We've also updated our guidance for expected basis differentials in the Haynesville as well as estimates for our 2020 per unit cash cost per mcf e in addition, we provide the anticipation well count and completion Cadence on a quarterly basis for your review. And with that. I'll turn the call over to Rob thanks Gill revenues adjusted for cash-settled derivatives total of $59 million comprised of twenty-three million of oil and natural gas revenues and six million of cash settled derivatives average realized price including cash-settled derivatives was $2.32 per mcf e for the quarter versus 253 and the previous quarter average realized price without the hedges was a dollar eighty four per mcf e and the quarterback
Are per unit cash operating expense which is defined as operating expenses. Excluding d d d d d n a and non-cash GNA was a dollar and $0.03 per bulb CFE generating a cash margin of 58% for the quarter Capital expenditures for the quarter told eighteen point four million of which 99% will speak on Drilling and completion costs associated with Haynesville Wells.
We conducted drilling operations on 12:00 gross 4.0 net Wells and added five gross 1.8 net wells in the quarter.
Of the five gross 1.8 net Wells added in the quarter one gross and one net operated well were added in January and for gross and net name Wells were added at the end of March which had previously been modeled in the second quarter.
Exit the quarter with ten gross 4.6 net drilled but uncompleted Wells for completion at a later date, which should be at higher prices.
We reaffirm our previous guidance of forty to fifty million of capex for 20 20 and are now planning to complete and turn in line just short of an additional net. Well versus pre-owned need guidance.
Interest expense total two million in the quarter which included cash interest of 1.2 million incurred on the company's revolver and non-cash interests of eight million incurred on the company's convertible notes the non-cash interest expense was comprised of four million of paid in kind interest in point four million of amortization of debt discount and debt issuance calls primarily associated with a company secondly notes.
Moving back to our slide deck as we've highlighted before we've included several slides beginning with slide 10 that show how we compare to our peers.
The stated earlier and as you will see again on slide ten are trailing 12 months return on Capital employed was 12.5% despite very low commodity prices in the quarter. This 12.5% return rates V out of the fifty two companies in our peer group, even though we are calculating through the first quarter with much lower commodity prices than the peer Group which calculation was made for them on a trailing 12-month basis through the fourth quarter when prices were higher our guess is we will move even higher in the rankings. Once our peer Compaq updated through the first quarter in addition to returns. It is critical to to maintain low leverage in these challenging times for commodity prices. And as we said earlier we sit at one point three times trailing 12 months ebitda shown on slide 11.
Even though our Capital efficiency and return on Capital employed are near the top of the peer group in our debt-to-ebitda is conservative. We only trade at a little over two times Enterprise value-to-ebitda is shown on slide twelve even after a nice move up recently.
Needless to say it is an extremely low multiple versus where companies typically trade in particular one with looked at metrics and an improving commodity Market with exceptional rates of return home.
Is our average daily volume over the last 45 days has ticked up. We are hopeful we will see more institutional interest in the stock in particular when viewing our leverage to an improving natural gas price range and decreasing service cost environment it although we want to establish 2021 guidance until late this year our internal modeling suggests that current strip pricing including our Hedges. We potentially could hold volumes flat and increase Eva. About 15 to 25% with 15 to 25% less Capital based on current cost estimates. This is obviously preliminary and subject to change but sets up nicely if prices materialized consistent with the Curve.
is everyone
likely Knows by now all of our current activities are centered to the core of the Haynesville beginning of slides 13 and 14 we currently have over 22,000 net acres in the core of the play and we entered to 6:20 with two hundred Note 8 gross 91 net locations on spacing of 880 between well bores for a net inventory life of over sixteen years a current pace
all right courage in North Louisiana is over 70% undeveloped and 73% operated we estimate over 1 TCF of Reserve exposure at 2 and 1/2 BCF 4,000 feet of Latter of an eight hundred foot and eighty foot spacing in North Louisiana alone versus you're in nineteen book proved reserves in North Louisiana of approximately 510 equivalent
We also maintain approximately 3000 acres held by production in the Angelina River trend of the Shelby trough where you saw a recent development transaction announced by Blackstone minerals off. The Haynesville in Bossier formations are both perspective on our Shelby trough Angelina River Trent Anchorage. The evolution of the completion design in The Hazing was shown on slide fifteen has transformed the play into one of two premier gas basins in the country. Our results have shown on slide sixteen are very consistent. All of our acreage has now been de-risked and we're in development mode drilling predictable Wells and proven areas and connecting Wells into existing pipes with excess capacity.
We continue to outperform our type curves and on slide 17. We track our wells versus 309 4600 foot lateral industry Wells drilled depend the core.
Industry pumped an average of 3100 lbs per foot but as you can see the older Wells are underperforming the newer Wells as average profit is lower on those older. Well are six Wells shown in green were stimulated with approximately 41 pounds per foot of profit and Tighter clustering an interval spacing and not only are they quite a bit better than industry average composite curve are wells exceed our 2 and 1/2 BCF 4000 foot type curve to an estimate of approximately 2.7 BCF 4000 ft. This is clear. There is a clear correlation between profit loading and cluster and interval spacing and we expect our more recent Wells to pull up the composite curve over time from this optimization off.
Slide eighteen reflects our 7,500 foot curve where we now show a composite of 225 industry Wells with an average profit concentration of approximately three thousand pounds Palm foot which for the most part fits our 2 and 1/2 BCF 4000 foot type curve. The older Wells included in the industry composite curve that are underperforming the curve in the later years or a handful of understand related Wells with profit loading of approximately twenty three hundred pounds per foot like the 46-foot laterals are more recent operated 7512 or performing materially to a composite estimate of approximately 202.8 BCF 4000 ft due to higher profit concentration and Tighter cluster and fractal spacing.
slide nineteen
Which now shows a composite result from 225 10000 foot ladder laterals with an average of 3000 pounds per foot of profit or for the most part tracking are 2 and 1/2 vfc type curve until the older Wells with lower prop and concentration kick in a little over two years out our nine Wells which averaged approximately 9600 feet of life and 3500 pounds per put a profit for the most part tracking are 2 and 1/2 BCF 4000 foot curve.
As we have stated before we believe our well performance speaks for itself and it's driven by a number of factors one quality of our acreage and no question. We're in some of the best rock in the back to the optimum completion design were profit concentration cluster an interval spacing and pump rates provide a material difference in results and three months back technique that minimizes daily drawdown flattens. The decline curves provides higher recoveries of gas in place and most importantly maximizes returns home. We have updated our economics is shown on slides 2322 to reflect the fifteen to twenty percent reduction in service cost. We are currently seeing and it has made a meaningful difference.
Or economics overtime if improved dramatically on each of our laterals do the outperformance of our curves on the 4675 Hundred-Foot curves and service costs to walk across all Wells as you can see, even at $2 and 25 gas price we can we can reach approximately 60 to 98% filled level jobs are ours now due to the recent reduction in costs as a reminder. The Haynesville economics are driven by high volumes attracted. Netbox relative to Henry Hub is compared to other guests patient's low lifting costs and Severance tax abatement until the earlier of two years will pay out of the wells.
In summary, although we can't control commodity prices. Our team is actually shooting. Well our balance sheet is in good shape with low debt metrics. We have a nice hedge position that is minimize our commodity price risk and helping to provide twenty $20 free cash flow at reasonable gas prices in addition. The recent rise in for gas prices along with a significant decrease in Service Company bids creates a unique value opportunity for our current and future shareholders with that. I'll turn it back to cold for a Q&A.
Thank you. We will now begin the question-and-answer session to ask a question. You may press star than one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the key withdraw your question, please press * then two and I'm just I'm real pause momentarily for the symbol the roster.
Enter first question today comes from Wells Fitzpatrick from SunTrust, please go ahead. Hey, good morning morning. Wondering what else just a housekeeping question the 16 to 20% reduction and costs that you guys talked about. Can you remind me is that included in in guys? Would that be incremental to it? Yeah, so I tried to address a little bit at that in the prepared remarks Wells and this is Rob we're completing extra almost an Extranet. Well with the same capex guidance, we haven't changed our production guidance, obviously, you know a little bit more completion activity could improve on that. But for now, we're staying with the midpoint of our guidance said a hundred and forty million a day and there's no
Eventually room to come in on the lower portion of our capex range. So for now we've kept the range the same but are increasing by it's really dead at Wells versus previous guy Idols. Okay? Okay, perfect and and sorry again, if if you guys hit on this but but what what trends are you seeing on the non on spending money? And and how do you think that could could flow through to uh to the twenty-twenty spent? Yeah, exactly. So so the the for gross and net Wells were added at the end of March, you know, we had previously guided for that in the second quarter and they completed the sooner than that and those were all non-operated. Well, so it's a great question. You know, what do we see from a non-op standpoint for the rest of this year? We really don't currently budget or don't have included in our guidance non-operated wage.
That that could change down the road in the future. But we we think it would be more likely that it would be in the back, you know, call it the the last order and half if that occurs. We don't think we're going to see any Chesapeake well proposals but we have smaller interest in some other areas that potentially could be developed late this year. But again right now it's not definitive. We haven't we haven't baked that into our guidance and and we haven't, you know, formally elected in two thousand proposals.
Okay. Okay. Perfect. And then just a last one for me when you talk to those four point six Ducks is there I mean, is there a trigger price in mind? Is it off the timing and and if it's priced like a like a I think it sounded like, you know could could could you give us some idea of of of what might get you guys to get the police out there? Yes, So when you look at our our Cadence, some of those ducks are clearly baked into that Cadence, you know, so so when people say suck your capex ran hot in the first quarter, it was really capturing, you know the cost that we had all along planned. We had thought it would be smoothed out a little bit more into the second quarter, but it was capturing the first quarter and and the Cadence factors in some of those dots now. We we do currently have an an incremental well or two that that wage
currently scheduling to complete
In January of 2021 that would not be included in that schedule. So, you know, I think based on holding volumes relatively flat life said seeing an improving gas price later this year. I think if you if you forecasted relatively flat volumes quarter-over-quarter with you know, some variance based on when you complete those Wells then that probably still makes some sense so partly it's you know, it's just better gas prices in the future. But secondarily it's trying to hold volumes flat and maintaining those ducks that sets that you could complete them to accomplish your maintenance program.
Okay, perfect. Thank you guys so much. Thanks a lot.
And our next question comes from done Macintosh from Jonathan right to go ahead. Hey, good morning. Rob and Grill. This is actually Austin as a is associate another dog. Got another strong quarter. Thank you. I guess my first question is the new the new presentation highlights on significant service cost reductions. I was wondering if you were hearing loss what y'all are hearing from those providers and is it largely driven by lack of demand and the holy basins and is it our other contracts primarily batch to batch or do you have the ability to lock in longer-term contracts?
Yeah, so just give a couple of good questions there. Yeah, obviously what we're seeing here recently is largely being driven by the crude oil sell off and the Steep drop in place an overall rig counts, which obviously has been more pronounced much more pronounced than the oil side versus the gas directed side. So we are getting the benefit in that regard in terms of the rigs. Obviously the rigs being turned back the the rate that they have people are cutting their costs pretty dramatically to be able to either keep them working or have someone pick them up. So as a as a benchmark, you know, you're looking at rig rates that three or four months ago were probably in the range of $20,000 a day off today or more in the range of 15 to $16,000 a day. So that gives you an idea of some of the cost and then the other big one is really on the Frac side and we're seeing just incredible.
Impressive numbers coming in on spread rates going forward and obviously that's also due to the stacking of tremendous numbers of practically took some from from the oil sell off. So I think you would say that that's been a factor the early spring weakness in natural gas prices has been a factor home and fortunately we're now seeing a chance to to take advantage of that in terms of longer-term nature. We could lock some stuff down particularly in terms of the drilling rig up a little bit more difficult than some of the other areas and given our level of activity. It's a little more challenging to really lock something down safe through the balance of this year. But we're managing that as best we can
I appreciate the comment.
And I guess my follow-up question. Do you kind of touch with Wells has answer but it looks like the extra completion in 1 q and y'all had you said leave the house for your 20 complex was unchanged and so is that mainly driven by lower cost or is that driven by line of sight on further reductions? And it looks like Thursday will be the heaviest on completions and no completions in for you is that angle towards bring it on new volumes in the what looks like a much stronger price.
Yeah, so I'll take that. Yes, I mean, basically, it's I guess something on the top piece. There's some things that we can't control the timing of so we make the best estimates we can be secondarily. We've designed the the Cadence to try to keep production volumes is roughly flat as we can quarter-over-quarter. We did have a little bit of waiting obviously to the front end of the of the 2020. We do have a good bit of activity planned in the third quarter, which will roll into the fourth quarter volumes. Well, I think we'll be taking advantage of of better pricing so a little bit of all of those, but generally trying to keep production volumes flat and generate as much free cash flow in the calendar year. As possible. Thank you.
Thanks.
And our next question comes from Jeff Grant from Northland, please go ahead.
Morning, Jeff. I think you mentioned in the prepared remarks, you know, it sounded like some pretty impressive cash flow growth with less capital and in Twenty-One wage without even really needing to do anything to to the volume but given kind of the the bullishness it sounds like there is here, you know in internally and externally with natural gas prices. Would you guys say it's kind of that trigger point to get you to do something maybe a little bit more aggressive than a maintenance level program and then kind of a related point. Is there any comfort level and finally into an outspend for growth or with any growth need to be kind of within a a cash flow type of model? Yeah. So Jeff great question and and and you hit rock on what I was trying to to stay even though we haven't put formal guidance out there and it's subject to board approval and change its the ability to do more with less wage.
Obviously the whole volumes flat and spend fifteen to twenty percent less creates that much more free cash flow. And so every time we drill a well in particular at these rates of return and what you'll see in our economics that had 275 gas which is really where the strip basically is all three months at current service cost. Generate over 100% Irr And so going to be a very compelling reason in my mind to not just told by a rep to to go ahead and spend more money. Even if you spent the same amount of money in 20 21 verses twenty twenty. You're going to see pretty Healthy Growth and that's a pretty dramatic increase in the in the value of your PDP reserves and your frankly. You're going to grow your Yvette. And you're going to have to train
at a better price
Just even if you held your multiple the same so we'll see where we are as we get closer to the end of the year. We usually put that budget out in December. But as we've said before we set it in this package the least the ability to spend a little bit more money and yet still generate free cash flow grow the Enterprise that much faster and we're not talking about just volumes were talking about value here the the value of your PDP reserves that a minimum is certainly on the table and we'll just have to see where we get and get their money to get there and what the board's decision might be but with you know, over sixteen years of inventory life, you know, what's really interesting you drill and complete them the same way they come on the same basically way we can grow pretty quickly and and do so by generating very good rates of return. Now look if we're at
$275 or $3 gas and 20 21 service costs are probably going to start creeping back up and less oil prices are still low oil prices are still low than we think there's going to continue to be pressure on service companies to keep their cost structure extremely low. So a long-winded answer but it's it's basically meant to just show you our flexibility on on on the types of free cash flow. We could generate and or grow that much faster in value by spending more money.
Got it. No, that's that's perfect. I appreciate it for my follow-up you guys extending the the term on the second lane for for a year. Is there how should we think about that in terms of being a functional piece of the balance sheet of that was that is I guess should we think about the intent of that to remain on the balance sheet maybe a little bit closer to that term over that I guess more of a flexibility maneuver such that you don't have to do anything before still. Good morning. I think we don't think of it as a as a permanent significant piece of the balance sheet. It's there because we wanted to have as much liquidity under the revolver as possible as we go through a fall and then a spring of 21 redetermination to the extent that we see significant amounts of increasing liquidity under the revolvers and highly highly possible. It's not likely that sometime in the 2021 frame probably not this year, but sometime next year that we would pay that off.
Understood first attempt. Thanks, Jeff.
And once again, if you'd like to ask a question, please press * then 1 and our next question comes from Noah parts from Coker and Palmer, please go ahead good morning morning God. Oh, I know say I just want to make sure I had a number right when you were saying before I think I got this right about wage level IRS do the recent reduction in cost were up to I think he said the 60 to 98% range. I was I was trying to spot them in the slides was that from slide twenty. Yeah. So if you look at and it's 2322 and and I believe I said it even at $2.25 off could generate 62 close to a hundred sixty-two almost a hundred percent irrs in particular on 1/21 the 75 month.
lateral at 2.
I'm twenty-five cents generates 97.5% So that was that was the comment.
Great. Thanks a lot. I just want to make sure sure the source right on that and you know, the discussion of course about the services side is involved interesting and helpful sort of especially making me think more about the interplay between what happens in the oil side and how that can have a sort of feedback into services for out for you and I guess just as a little bit of a reality check have you seen a migration of service vendors over in the last, you know month or two or or equipment either I could sort of picture it either coming into the area just on on gas looking looking stronger or or maybe just being taken out of commission all other and so maybe the the total amount of equipment sort of going down. Do you have any sense of that at this point? Yeah, so no deal. We don't really have a whole lot of great intelligence.
On what kind of increase is may have occurred in the Haynesville area specifically, but we know from a vendor perspective as their overall Fleet wage are getting largely stocked. They've got to become more competitive in order to keep what they do have working working. And so as I said, I think a minute ago wage, you know, we did to go through a pretty weak spring in fact current months or or quite week as well, you know and kind of a 2 or slightly sub $2 number and that it seemed overall Haynesville. Rig counts slowly coming down over the last six months or so. So we peaked it about 60 rigs running in the Haynesville kind of mid year last year. We're down in the kind of mid-to-high 30s rigs running currently and those things have also contributed to to the Improvement in prices and then we've had an acceleration of birth.
Here with the oil price crash whether or not companies are moving additional equipment in to the Haynesville. I really can't say at this point in time. Okay, great, then telephone know and I think most of I I did also just just to follow up a little bit on on Ducks. So it does sound like that song really does give you some flexibility going forward. And actually I had a different question. I wanted to ask for from what we're hearing from the the public folks in the the Haynesville just sort of how you're approaching the price environment as best you can tell is the behavior pretty similar among the you know, the price of folks out there as well in the Haynesville.
Well, I'll take a stab at.
No, this is Rob. There are actually some private guys who are probably spending more money than the public guys on a you know, an equivalent basis mainly because of funding and highly uh-uh percentage of gas hedged at good prices. So even though the rig count Fallen pretty dramatically, is it Go pointed out you do see the the rig count being probably higher than it would had those Hedges not in place. Now. The question is forward-looking. Where does the rig count go? And and I think you're still in particular on the public side. You're going to still still see people conservative off some of which need to fix the balance sheets or improve their balance sheets others, which just want to live within a free cash flow basis. And so I don't I don't think you're going to see a rush job.
Back to put gas rigs back to work anytime soon, which ought to keep which ought to keep prices higher frankly and then on the private side mini if the whole private equity-backed firms were building an asset to be sold or IP owed within a five year period obviously that hasn't happened in many of them were building out in a stream Assets in hopes of creating higher throughput volumes carving that value off in the Midstream and then selling it and and then there's been one in particular who did a great job of that. They've sold their Midstream and I think you know, you could see them moderate their activities. So all in we would we would expect to see the rig count flat 2000s down a little bit more until late this year going into twenty Twenty-One. Then all bets are off because prices are so much better.
Right, right and actually talking prices and in the Futures curve. I haven't paid a a ton of attention to a different, you know wasn't all that encouraging until recently. Do you have any sense sort of what the liquidity is is looking out looking like if you go a bit further out the features curve might just might casual observation suggests to me that the volume hasn't been all that high, you know, just considering what the you know best levels we've been in a while sure. No and you know, it's a valid point anytime the further out you go the less liquidity there is in the market and The Wider the bid-ask spread is on swaps, you know, if you want to try to to hedge those volumes, we've always just sneak out eighteen months or so and there's been plenty of liquidity and transparency and and good pricing over that that term certainly but yeah, it's dead.
you know just like e&p equity research, you know, there's
Fewer hedge funds speculating in commodity prices in the in the Futures curve that being said, there's some sell-side firms out there who are very smart guys that are known to be ahead of the of the industry who are predicting 3 to 350 gas in 2021. They came off when gas prices for 20 21 were a good bit lower and the and the market has moved in the in their Direction. So, you know, we're not we're not here to predict gas prices. We've we've you know, no one knows for sure, but we certainly rely on a lot of smart guys who are who are very bullish on twenty Twenty-One and how could you not be with shut-ins of the world and Associated gas reduction in capex programmes in obviously, we got to get to the other side of the virus and and get the LNG export demand at 100% but it sure feels birth.
Looking forward then it has been a long time.
Great. Thanks a lot. Thanks.
And this will conclude our question-and-answer session. I'd like to turn the conference back over to you feel Goodrich for any closing remarks. Thank you everyone. Appreciate you participating in our first quarter call. We look forward to reporting back in a few months. Thank you.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your line and have a great day.