Q2 2020 SilverBow Resources Inc Earnings Call
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Ladies and gentlemen, thank you first Danny.
Welcome to they still were they.
Resources second quarter 2020 earnings conference call.
I just find all participant mine Jerry to listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During this session you any depressed start doesn't ever weighing on your telephone keypad.
Please be advised that today's conference is being recorded.
If you recall further associates, Please press star zero or now and the conference over to your speaker guests at night.
Senior managers finance and Investor Relations, So Burberry resources Inc., Sir you may begin.
Thank you Amanda and good morning, everyone. Thank you very much for joining us for our second quarter 2020 conference call with me on the call today or Sean Warburton, our CEO.
Eat out or C O, Oh, Hey, Chris I been thus our CFO.
Yesterday afternoon, we posted a new corporate presentation to our website and will occasionally refer to it during this call we encourage listeners to download the latest materials.
Please note that we may make references to certain non-GAAP financial measures, which are reconciled to their closest GAAP measure in the earnings press release.
Our discussion today may include forward looking statements, which are subject to risks and uncertainties many of which are beyond our control.
These risks and uncertainties are described more fully in our documents on file with the FTC, which are also available on our website.
And with that I will turn the call over to shop.
Thank you, Jeff and thank you everyone for joining our call. This morning.
First we hope that everyone listening is well I.
I would like to thank our employees and our contractors as well as our vendors and other key stakeholders.
Their dedication and resilience during these times.
We continued to take the necessary measures to ensure the health and wellbeing of all employees and contractors.
Safety strong is of Paramount importance.
In the face of the global pandemic.
And an abrupt declining commodity prices I'm pleased to report that silver, though delivered strong operational and financial result.
The actions we took in March and April allowed the company do fortified balance sheet optimize its capital spend and timing.
And realize expense savings.
Specifically during the quarter, we generated 14 million a free cash flow and reduced our revolving credit facility borrowings by 20 million.
Quarter over quarter.
Looking ahead.
Super Bowl is favorably position compared to our peers given the relative visibility, we haven't our cash flow and the flexibility, we haven't or development program.
As noted in our press release yesterday.
We plan to move forward with a gas development program in the fourth quarter.
Just on or hybrid return assets in Webb County.
What's even more impressive is that we reaffirm our previously stated goal a 40 to 50 million a free cash flow for 2020.
Including the additional development.
The second quarter marked the low point of our quarterly production profile for the year.
During the third quarter, we will complete and bring online our inventory of Ducs deferred earlier this year.
In the fourth quarter, we will commence drilling in our Webb county dry gas area.
Given the late timing of these projects.
We anticipate the majority of the production EBITDA benefit from this development to start in the first quarter of 2021.
However, we do expect our EBITDA inclusive of our amortized hedge gain to return to first quarter level for the fourth quarter of 2020.
Looking into 21.
Over boat is poised to generate meaningful free cash flow and benefit from increase in gas prices.
Which we believe our biased higher in 21 from current levels.
At current strip pricing, we plan to spend within cash flow.
World production in the high single digits in maintaining a similar EBITDA level inclusive of amortized hedge gain.
In addition to hitting this trifecta.
We expect free cash flow in the range of 20 to 40 million.
We forecast the growth in our production the come from our gas assets.
With oil and NGL flat year over year.
Based upon our current share price, our full year 2020 guidance implies a 90% free cash flow yield and a greater than 50% free cash flow yield and 2021.
Furthermore, we have additional capacity in our hedge portfolio from a gas exposure standpoint.
Looking at gas prices today, the curve has moved up by close to 15% in 2021 compared to pre co bit level.
Chris will provide further detail in his comments about our use of callers to execute our risk mitigation strategy.
As we look to formalize our 2021 budget over the coming month, our strategy remains the same.
Having a well balanced portfolio provides us both drilling optionality and the opportunity to pursue accretive corporate and asset level transactions.
We see oil and gas prices inversely correlated and that's our our counter cyclical bolt on activity as a key differentiator for us.
Furthermore, we are optimistic about underlying gas price fundamental and continue to manage our balance sheet to provide us with financial strength and flexibility.
With that I will turn the call over to Steve to provide an operational update.
Steve. Please go ahead.
Thank you Sean.
The second quarter, we grew tailed on average 57, M. Mcf per day Nat gas production.
Nearly 2000 barrels per day net oil production.
From a timing standpoint.
May was the low point in production for the quarter.
In June we returned approximately 2700 50 barrels per day of net oil production to sales.
As a result of favorable midstream partnerships.
We returned these wells to production ahead of schedule.
Which drove our oil and NGL volumes about their guidance ranges for the quarter.
We anticipate remaining 850 barrels per day of net of low production to return to sales in the third quarter.
And the remaining 43 Mmcf per day of net gas production by year end.
By enlarge our technical teams are not seeing any degradation and well performance related to recruit tailwinds as we show on slide 16 of the corporate presentation.
We are currently performing to operational processes to optimize the management.
Of our curtailed program first.
We're managing these lease obligations another requirements to ensure compliance.
Second.
As shut in wells have returned to production, we're conservatively managing chokes to optimize production rates and maintain reservoir integrity.
I'm very proud to the incremental cost efficiencies our team has been able to identify.
On the L. elite, Brian we had been actively partnering with our vendors on procurement initiatives to further reduce costs on items like chemicals rentals and other ancillary services.
We have been successful in identifying and reducing operating costs on our recently acquired gassy fridge, including the decommissioning of three and units.
Additionally, the silver bow team continues to assess the many subsurface characteristics needed to establish redevelopment plan that meets commercial expectations for this new acreage.
As returns driven organization, we want to make sure all new development locations meet our investment threshold.
Thus far this acreage appears very similar to our existing orogrande asset and could present further cost synergies.
On the capital side, we secured fair favorable early mover pricing on the five wells, we plan to complete in the third quarter.
This strategy reduced our expected capital spend for these projects.
Approximately 30% from the original estimates.
As noted in our earnings release cost efficiencies and project execution have allowed us to maintain our 2020 free cash flow guidance.
While also adding 12 and a half me into the midpoint of our 2020 capital budget.
The additional spend in the fourth quarter is for eight of nine planned dry gas wells in Webb County.
The ninth well is the last 76, well amazed to pad, which is planned to reached total depth in 2021.
Outside of the low may surprise, yet the remaining three wells in the fourth quarter are associated with fast skin Upper Eagle Ford drilling.
Our revised 2020 capital budget of 95 to 105 million.
Implies 40 to 50 million of Capex in the second half of the year.
We estimate approximately 20 million will be incurred in the third quarter related to completing the macmall and oil wells differed from earlier this year.
The remaining 25 million is attributable to the dry gas development expected to play take place in the fourth quarter.
As part of our release yesterday, we provided guidance.
The third quarter in full your 2020.
For the third quarter, we're guiding to it production range of 173 to 180 Mmcf per day.
72% being gas at the midpoint.
For the full year 2021.
We are increasing our production range from one to keep board 185, M.M.C. at the per day to a range of 176 to 184 M.M. CFP per day.
76% being gas at the midpoint.
I provided guidance assumes ethane rejection for the remainder of the year, Although we will continue to evaluate and make monthly elections in accordance with commodity prices.
As John alluded to earlier, we believe the actions taken to manage production and reduce costs favourably positions the company heading into the year.
Our net oil production production is expected to reach the high point for the year late in the third quarter.
With the return to activity towards year end, we expect to enter 2021 with a significant and opportunistic amount to flush gas production.
Our goal is to repeat the timing savings and well performance demonstrated with our first six well the Mesa Pat.
While we view oil and gas prices to be inversely correlated over the near term.
Our diverse portfolio allows us to remain flexible and adaptable to market uncertainties in our operation.
As such we continue operate with a returns driven mindset in regards to any future development.
With that I'll turn it over to Chris.
Thanks, Steve and my comments. This morning, I will highlight our second quarter financial results as well as our hedging program price realizations operating cost and capital structure.
Our second quarter revenue was $25 million, excluding derivatives with natural gas, representing 82% production and 73% of sales.
Our realized hedging gain on contracts for the quarter was approximately $18 million.
Based on the midpoint of our guidance and our hedge book as of July 31st.
Our total estimated.
The price of $2.60 per M M B to you.
And our oil production is 93% hedge with a weighted average price of approximately $45 per barrel.
For 2021, we have 67 mmcf per day of gas hedged at a weighted average price.
I have $2.34 per M. M. B to you inclusive of floor prices for our gas collars.
Our gas collars next to your represent approximately 85% of our hedge position and have a weighted average ceiling price.
I have $2.91 per M M B T U preserving material upside exposure to gas price.
Additionally, we have over 3300 barrels.
Per day of oil hedged at a weighted average price of approximately $45 per barrel, notably.
Our hedges are a combination of swaps and collars with the weighted average price factoring in the floor.
As of July 31st our Mark to market value of our hedge portfolio was approximately $12 million.
Risk risk management is a key aspect of our business.
We are proactive in adding oil bases and calendar month average roll swaps to further supplement our hedging strategy.
In fact, silver Boas, one of only a handful of companies that hedge the cama roll before the recent downturn in prices.
In order to combat a sustained period of lower prices, we layered on additional basis swaps during the quarter, extending our protection extending our protection into 2021.
Please note. This reflects our hedge book as of July 31st.
Silver both hedges provided relief from second quarter benchmark prices excluding the.
Excluding the impact of hedges Super Bowl realize an average gas price of $1.70 per Mcf and average oil price of $23, an 82 cents per barrel and total equivalent price of $1.93 cents per Mcf fee.
Including the.
Hedge impact of cash settled derivatives silver both average realized prices were $2.34 per mcf of gas.
$73.34 per barrel for oil and $3.31 per Mcf fee on a total equivalency basis.
A combination of silver both hedges and actual volume volume produced during the quarter resulted in an uplift of 64 cents and I realized gas price and a 50 dollar uplift in our realized oil price.
As shown on slide 14 of the corporate presentation silver both continues to maintain favorable pricing on both oil and gas compared to our in basin peers.
Turning to cost.
Lease operating expenses were 39 cents per Mcf.
Transportation and processing costs were 35 cents per Mcf per.
Production taxes were 8.2% of oil and gas sales.
In our yellow E T M P and production taxes together coal production expenses were 90 cents per mcf be continuing our trend of total production expenses of less than one dollar.
Orencia.
Cash DNA for the quarter was $5 million, our lean cost structure is a competitive advantage as it allows us to remain flexible and sustained profitability.
During protracted periods of low commodity price.
Adjusted EBITDA for the quarter was $26 million.
As reconciled in our earnings materials, we generated $14 million of free cash flow.
Primarily due to the effects of pricing silver Bell reported a noncash impairment write down of $260 million on a pre tax basis.
Turning to our balance sheet, we reduced total debt by $20 million during the quarter as of June Thirtyth, we had $270 million outstanding under our revolving credit facility.
$7 million in cash and $67 million of liquidity.
Our cash interest expense was down 20% from a year ago as a real it was as a result of lower interest rate and debt reduction.
We continue to watch the interest rate market and are considering adding swaps to mitigate exposure to future interest rate hikes.
Our net working capital deficit was $6 million.
A 25 million dollar cash outflow quarter over quarter.
Given the pay down of our current liabilities during the first half of the year working capital should be less of a factor from a cash timing standpoint for the remainder of the year.
Please note.
Working capital is excluded from our free cash flow calculation.
Capital expenditures totaled $5 million on an accrual basis, excluding acquisition and divestiture activity.
During the quarter, we closed a bolt on acquisition of gas producing properties in a divestiture of our noncore Wyoming assets.
Both of these transactions were previously announced last quarter.
In conjunction with the unwinding well derivative contracts in 2020, and 2021 silver bow is able to amortize.
$38 million it received in March indiscreet amount extending from April 2020.
Through December 2021.
The amortized hedge gains factor in two silver both adjusted EBITDA calculation for covenant purposes over the same time period.
For the second quarter be add back was approximately $7 million, bringing our leverage ratio to 2.4 time in total we received a $25 million benefit in 2020, and a $14 million benefit in 2021 for purposes of calculating our leverage ratio.
At the beginning of the quarter, we completed our semiannual Redetermination, where our borrowing base was set at $330 million I would like to thank our banking syndicate for their continued support.
At the ended the second quarter, we were in full compliance with our financial Covenant and had significant headroom.
And with that I will tournament turn it over to Sean to wrap up his prepared remarks.
Thanks, Chris.
To summarize.
Super Bowl set up to generate meaningful free cash flow for the remainder of 20 and 21.
We hold a constructive outlook of domestic supply and demand dynamics that supports higher gas prices.
Particularly if oil prices remain subdued.
Given the natural decline in associated gas production, and Industrywide limited drilling and completion reinvestment.
Due to our relative balance sheet strength in cash flow visibility, we expect silver Boe to outperform other small cap peers as our winning strategy continues to bear fruits and provides us with the staying power.
Potentially consolidate and operate a larger asset base.
Our strategy remains intact with multiple play both for the future.
We pride ourselves and our ability to continue producing high quality earnings material. In addition to putting out guidance for the benefit of all of our stakeholders.
Thank you for joining our call this morning, and allowing us to share our results.
In the face of uncertainty.
We find ways to step up get creative and think outside the box.
We look forward to broad providing further updates on our next call.
Hi, everyone listening I hope that you and your family are staying safe and I hope to see many of you in person in the near future.
With that I will now turn the call back to the operator.
For the Q and a portion of the call.
As a reminder, it seems like Tri state on your question. Please press Star then the number one on your telephone keypad.
That is star one Josh can audio question well pause for just amendment chicken Paul that came in a roster.
And your first question comes from Jeff Grampp with Northern Midland Security.
Hi, guys.
Oh.
For Sean or maybe Steve I'm on the Walcott front end you guys have a couple of flights talking about some of the efficiencies and cost reductions that you're seeing I was hoping to dig in a little bit more I guess as we think about second half well cost for you guys can we kind of compare that to maybe what you're saying at the start of the year how much of a reduction have you seen and.
If you had to kinda bifurcate that out in terms of kind of internal efficiencies versus maybe some attractive pricing you've seen from service companies, what that but that's what might be.
Hey, Jeff This is Sean Thanks for the question, Steve and his team has done a great job driving down costs on top of the capturing many efficiencies even coming into the downturn. So.
Why don't I turn into the Steven let him give you more details on with him and his team have been able to accomplish.
Yeah. Thank you Sean.
Jeff what what we've done is we've been able to capitalize.
On some level loading opportunities with some of the service companies that have that commitments with some of the larger companies later in the year in order to fill some of those spaces early on in the here.
That's what caused us a slight acceleration of the ducks and most of that drilling <unk> most of that being on the completion side that said.
More specific to your question, we're seeing about a 30% reduction.
From where we were at the end of last year and earlier this year as as a current price basis, a much of that discount is coming from the service providers and I would basically say about a that 30% about 65% to 70% is coming from the service side and another 25% to 30% is coming from our increase.
Operational efficiencies.
As we advance to the year, we're looking for much of that price.
Price position to hold through the end of the year.
That said going into 21, we're estimating about maybe a 3% to 5% price increase in our FDR summits nine midpoint 21, hopefully that answers your question Joe.
Got it but that's really good I appreciate that my follow up which is kind of wonder and and you've got to have the slide on.
Some of the I guess, a little bit of in improvements and performance from these wells that you guys had shut in was curious how you guys are kind of building in the expectations for the performance of those wells is do you guys think there's some longer term improvements is that just kind of a shorter term bumps that normalizes over.
Hi, Matt how you guys are effectively I guess kind of planning for some of those dynamics.
Hey, Jeff you again. This is Sean you for my guidance standpoint, we're modeling assuming that those wells will return to previous a historical decline trends.
But we are monitoring and watching a reservoir performance both production and pressures to see if we can get to sustain longer term uplift.
So that's kind of my high level overview, and again, maybe I'll turn it to Steve Yeah. He wants to provide some more color.
Yes. Thank you Sean I'm, Jeff as you know we have a strong weighed in our production profile or mix to gas and so as as a gas company you never know when do you have potential for interruptible service on our oil side you know we've got storage capabilities. So when we go back and originally complete.
These wells on there on their initial completion, we take a very managed graduated choke strategy in terms of conservatism when we not only flow the wells back, but when we bring them online.
That that happens to benefit us very well by preserving our our fracture conductivity in our fracmax. So that when we do have interruptible gas service to the extent to be can we go through that same protocol on very managed shut ins in very managed returns to production.
In two that conservative practice, we've been able to see not only flush gas production, but where it for a period of time elevated gas production that we didn't continue occurs conservatively to model back to the original decline even though in some cases the wells continue to do better than the original declines we extend that.
Same mentality jump over into the higher Geo our areas for oil properties and Lo and Behold, we see some or what are the same similar affects both flush out some early better performance and in some cases, some continued better performing.
Got it gets a person at a time guys.
Thank you.
Thanks for the questions Jeff.
Your next question comes from Dang Macintax.
Born Sean.
[noise] one does.
I'm sure. They are looking for maybe a little more color on you know, it's bringing a rig back in the fourth quarter and you know obviously going to focus on the there's nine wells down there and web everything about the program for next year, you know you've talked about increasing your exposure to gas, but I mean, what does that program. I mean, it are you really got to is exposed to that kind of a dry gas program or do you.
Thank you all mix in some more liquids wells to maintain a little exposure to that side. If you do get more vertical real nice NGL and a little front as well.
Yeah. Thanks for the question I would tell you that we'll continue with our strategy of investing in projects to generate the highest returns for us.
So we'll continue to monitor near term pricing, we usually like to look 12 to 24 months out in front of our capital program and even lock in some of that pricing before we.
Take actions in the field.
Right now, we do see strong gas prices.
In 21 in into 22, so our our view is to start with the nine well program. That's all in place and that will actually start.
Moving a rig out in the early fourth quarter, so not too far from from today. So we're committed to that.
We then believed that the we'll take a pause on our capital program.
Towards the end of first quarter early second quarter of 21, and you know being that that's still nine months out we have in our playbook a combination of some dry gas drilling as the program picks up in the end of second quarter of 21, but we also have some liquids drilling rolled in there.
Mainly in our southwest Lasalle County area that has you know a kind of a good equal blend of oil.
NGL and gas.
Alright, great. Thanks, and then I'm, calling up kind of more for MACRA based I guess.
Been seeing more and more about exports to Mexico picking up and given your location in the southern Eagleford I'd have to imagine youre paying close attention to that as well.
What role does that play kinda in your because you never really.
Leaning on gas harder going forward and kind of just what your thoughts are on a on that scenario.
Next 12, 18 24 months.
Yeah, you know a key investments the thesis for silver bow is our location in premium markets, both on the gas side and on the liquid side and so.
What you described in terms of activity picking up the flows into Mexico, increasing we are seeing that we're encouraged also that NGL.
Our LNG.
Takeaways are starting to pick up as you look out in the September.
So we believe the prices are you know our demand will return where it was first and foremost and that's in the Gulf coast areas. So.
Yeah, our thoughts around investing in gas as we move into the end of the year is supported the we believed by the premium markets that we we have and Oh the early indications from.
Uptick in Mexico, as well as LNG is really supportive of all of our thoughts.
All right. Thank you.
Thanks, Doug Kevin I say.
Yes.
And your next question comes from Neil Gagnon, Okay.
When it all.
My question is you guys continue to see nice improvement just on well economics I'm just want to give it given efficiencies and cost advantage I'm. Just wondering could you kind of give us an idea now on kind of sensitivities, how you're looking at.
Some of your natural gas well economics today, and you know if you're just dots aren't can those continue to improve I just I'm trying to get an <unk> I'd ideas, just how much that those economics have improved via let's say in the last six or nine months. Given these cost inefficiencies and you know is that at a two dollar level to 50 to try to give us a hand on the sensitive.
<unk>.
Yeah no. Thanks for the the question Neil.
You know, we've always said that especially in our Webb County gas area to 50 or pricing is really the threshold, where we start to get a two returns that we like and typically we target a DNC returns in the 30% range as we move north to to 75 that.
Moves closer to 45% to 50% and then above $3 a it they get even stronger. So we've always said, we like our gas business Ed to 50, we'd like an even more to 75 and we love it at $3.
So we're still a that mindset and then on the capital side really we probably see at least a 20% reduction in capex costs is that Steve and his team have I think long term embedded into the system.
Late last year and into early part of this year in and we may see even stronger reductions.
Depending upon if some of these service costs hole at least over the near term.
And then just lastly, just on cost.
I guess, Joan which all walk into longer term cost here you have in the past or I guess would you like in your do you all anticipate costs going much lower from here. Thank you.
Yeah.
You know I think.
We really think.
Keeping flexibility and Optionality.
Is a critical part of managing the business and so I would say no near term and we'll probably I don't envision us locking in any longer term contracts.
Some of that is we look into 21, having oh, some cadence in our capital spend where we you know.
Ramp up activity increased cash flows and then scaled back to ensure that we spend within our cash flow.
So we're probably not set up at the current scale to do long term lock ins and just fits our strategy for now.
It is something that we desire to potentially get too.
As we get to be a larger company and have more scale.
Thanks again.
Okay, Yeah, Thanks, Neil good to hear your free.
And your final question comes from Josh Young biking.
Hey, good morning, guys and one Josh.
So I guess just a high level obviously your stock at this point is trading essentially as an option I guess on some combination of gas prices and your guys ability to survive on in that context, how do you think about.
Essentially sustaining the business and extending either the.
Longevity of that option or kind of increasing the to pay off right with a 400 by 70 million or so of debt versus a 40 million dollar market capitalization, obviously is a pretty lopsided and looking at this giant write off that you guys just had to do.
You know.
It would be interesting to get your rice or thoughts at a high level in terms of how you're working to extend or improved or the value that option.
Yeah, Yeah, we've always been firm believers that hey, you run the business or the way, it's supposed to be run and the market. The should reward you for long long term performance. We've always struggled to understand the markets undervaluing of silver both would that kind of <unk>.
As a backdrop I would say that the extend the runway through this challenging period is first and foremost on our minds. We took actions early on to shore up our balance sheet ensure that we had liquidity right cash mean king when there's great times of uncertainty we manage that we thought we believe very effect.
Actively.
The net you know next step then is how do you start to reinvest into.
This lower price commodity environment that we find ourselves in so we've set up a to where we have sufficient liquidity to start to the capital program up we believe that we have clear visibility through 21 and into 22.
Keep favorable liquidity and leverage metrics and we believe that what you're going to start to see over the next 12 to 24 month is the necessary consolidation within each of the key basins.
In the United States, and we believe Eagle Ford is one of the key and most primary basins to do that and at this point, there's really not a basin consolidation champion Silver Bowl wants to play in that environment, we think extending the runway and doing that while demonstrating very efficient.
[noise] operations, a low cost structure and prudent capital allocation is the way to win that that Oh consolidation environment.
Okay, great. Thanks, and as a follow up can you talk about so you guys talk about service cost savings, but those are kind of sound money because theres a oversupply environment can you talk about overhead or changes to the business that are kind of in your guys control and then also how.
So your guys operations benchmark versus your peers. So there was a prior question about that and you guys didn't address.
Kind of operating costs and efficiencies to some extent, but looking at kind of a third party literature. It looks a little different from how that's represented it'd be helpful to understand how you guys see it and then also kind of what changes you guys are making kind of get your drilling completion cost structure.
I guess.
More competitive.
Yeah, what I would tell you is.
You know, it's silver BOE, we we came into this downturn. We believe is a peer leading position in terms of operating expenses and capital. We were in that environment as are many of our gas natural gas a peer companies.
No. It was necessitated because we had a low commodity price that we had to deal with the and would have been dealing with for a number of years. So unlike many many of our oil peers that really had to tighten their bill instantaneously to survive we were already added a peer leading.
Cost structure again, both on the expense side and capital side.
We've always looked to try to have an all in operating cost around a dollar we continue to do that the second quarter doesn't represent the long term just because we showed in so many of the so much of our volume there is a fixed cost component in our expense that drove our unit costs up but when you look at the low.
Long term picture and take out the second quarter. So we're we're not just the top tier company in the Eagle Ford, but throughout most of the U.S.
So we see you know hey, prudent actions coming into it will continue to take prudent actions are going out of it and just a very focused on being a low cost operator.
Got it. Thank you that's really helpful and I do think that it was fantastic that you guys monetize some of your hedges and were able to get credit for.
For for that monetization and shut ins and production I think I was a industry leading activity and Ah. Yes, obviously, you have the benefit of the lower data.
I guess just last question in terms of.
Gas prices and kind of and again prior questions are addressed to some extent, but.
The kind of macro guys and industry consultants are all talking about potentially a higher than strip price or for gas going into next year and an under supplied environment potentially.
How how well positioned or you guys to capitalize on it obviously your hedges are set up in a way where you can get some extra cash flow from that but like how much does this company change.
And potentially I say actually dollar or even higher gas prices there.
Yeah. So as we look out into 21 pill, we agree that the gas prices, probably move or higher and hopefully significantly higher than the current strip. We currently have 50% of our gas hedge next year.
So we're we're being patient as we think about the.
So other 50% of the <unk>.
Our our view of our production next year.
Hey look to hedge that at higher prices in the current strip, we'll look to probably use callers again too.
Capture locking in when we think it's prudent but still be exposed to further upside.
Then on top of that you know our goal is to manage growth.
As well as deliver free cash flow, so if prices move up even higher a you know.
Mid threes pushing forward dollars will probably revisit our capital program and assess if it warrants and at those prices our returns will more than weren't the additional capital expenditures and what's great about our businesses.
We can we can bring on a lot of gas in the short period of time.
Last year within a five month period, we acquired a nice block of acreage.
And from acquisition to first production was that at five month period, and we brought on 100 million a gas a day, so where we think you know our strategy is to lock in a piece of it which we currently have remained exposed on our current plan in lock in that when it's prudent, but then also be ready and flexible.
Do you know.
Invest into even higher prices it supports it.
Great. Thank you very much.
Yeah, just appreciate the questions. Thanks.
No no further questions at this time.
Okay. Thank you everywhere.
Yeah, Jeff if you want to wrap up the call.
Yes. Thank you everyone for joining today and look forward to for about a year further update.
Towards that end the year November thanks again.
Thanks, everybody.
That does conclude today's call you may now disconnect.