Q2 2020 Earthstone Energy Inc Earnings Call
A brief question answer session will follow the formal presentation.
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As a reminder, this conference is being recorded.
Joining us today from Archstone Art, Robert Anderson, President and Chief Executive Officer, Mark Lumpkin, Executive Vice President and Chief Financial Officer, That's got the ladder Vice President Finance.
Mr demand are you may begin.
Thank you and welcome to our second quarter Conference call before we get started I would like to remind you that today's call will contain forward looking statements within the meaning of section 27 eight of the Securities Act at night team 33, as amended and section 21 of the Securities Exchange Act of 19th.
Before as amended.
Although management believes these statements are based on reasonable expectations. They can give no assurance that they will prove to be correct.
These statements are subject to certain risks uncertainties and assumptions as described in the earnings announcement, we released yesterday and in our 2019th annual report on form 10-K, and subsequent quarterly filings.
These documents can be found in the Investor section of our website Www dot her stone energy dotcom should one or more of these risk materialize or should underlying assumptions prove incorrect actual results may vary materially.
This conference call also includes references to certain non-GAAP financial measures, which include adjusted diluted shares adjusted EBITDAX. Adjusted net income all in cash cost cash DNA and free cash flow reconciliations of these non-GAAP financial measures.
To the most directly comparable measure under GAAP are contained in our earnings announcement released yesterday.
Also please note information on this call speaks only as of today August six 2020 does any time sensitive information may no longer be accurate at the time of any replay or transcript reading.
A replay of todays call will be available via webcast I go into the investors section or stones website and also by telephone replay.
You can find information about how to access those on our earnings announcement released yesterday.
Today's call will begin with comments from Robert Anderson, Our CEO, followed by remarks from our CFO, Mark Lumpkin regarding financial measures and.
Financial matters and performance.
And then some closing comments from Robert.
I'll now turn the call over to Robert.
Thank you Scott and good morning, everyone in appreciate everyone's attendance or for our call today, Thanks for making time to join us for our second quarter Conference call.
In the midst of the current pandemic, we continue to take appropriate caution and maintain focus on keeping our personnel safe while continuing to efficiently manage our operations.
Giving our strong second quarter results in the face of this unprecedented oil price collapse and difficult operating environment is evidence of the resiliency of our business plan and the solid commitment of our people.
Throughout these trying times, we have worked to quickly adjust to the rapidly changing conditions and align our cost with our business activity as well as preserve our strengths.
As we have discussed last quarter ending updates along the way, stating we would be free cash flow positive from the second quarter on for 2020, we had significant free cash flow was $35 million in this quarter.
This was driven by several factors, including limited capital expenditures in the quarter as we completed our drilling and completion program for the year strong hedge position that delivered over $29 million of realizations and significantly lower operating costs, partially as a result of our make shot in income Taleban program, but also.
So sustainable reductions.
Including the impact of our shot in program our average daily sales volume in the second quarter was 13555 barrels of oil equivalent or be a wee per day.
Even with reduced volumes and a 44% drop in average realized price per be a we and the second quarter. Our cost management efforts combined with the strong hedge position allowed us to generate higher quarter over quarter adjusted net income and adjusted EBITDAX I suspect we are one other very soon.
Small group of our peers, who can say that.
We expect to generate substantial free cash flow throughout the balance of the year, which should result in a decreasing debt balance and help us achieve our target of being below one times debt to EBITDAX for the year.
As we previously previously discussed in response to the sharp decline in oil prices in April and very low forecasted may oil prices. We made we made the decision in late April to shut in the large majority of our operated production for the month of May which resulted in approximately 60% of our total net production being shut in during may.
Okay, where the forecast of significantly improve June oil prices, which ultimately were more than double our April and May oil price realizations, we returned to full production in June.
We had a very successful quarter in focusing on cost reductions, which saw us reduce total lease operating expense or ela, we in the second quarter by 40% from the prior quarter.
Despite reduced production volumes due to our shot in program in May our teams continued focus on cost reductions resulted in a 30% decrease in elouise per be are we in the second quarter, two $4.53 versus $6.51 in the first quarter. This was a major driver of the overall.
All 33% reduction in all in cash costs during the quarter.
On a per unit basis, our all in cash costs went from near $13 per Boe in the first quarter to near $10 per Boe in the second quarter for a total 20% to 22% reduction. This is all in cash cost folks, which includes operating costs corporate gionee cost and all of our.
Interest costs on our debt.
To dive a little deeper into how we achieved the 40% decrease in L., We let me outline some of the key factors.
First as much of our peers have done we were successful in negotiating price reductions with vendors across the broad range of our lease operating expenses from chemicals to maintenance rigs salt water disposal contracts and compression costs.
Second we are benefiting from all our long term practice of spending a little more money as we go repairing wells facilities and associated equipment to reduce frequency of maintenance, which is resulting in a continued decrease in non routine ela we repair needs.
Third workover repairs have trended down resulting from our optimization of lift method chemical program improvements and general approach of fixing things right. The first time.
The limited offset Frac activity also reduced frac hit related Workover expenses.
Fourth we have been successful and getting the utility companies to perform electrical upgrades sooner than scheduled which has allowed us to eliminate generate generator usage on some of our newer locations.
Lastly, with limited drilling and completion activity. We have also been able to refocus our field employees towards lease maintenance, which has allowed us to reduce contractor labor.
All of these items and many other subtleties of operating were in progress as our team has a history of continually driving down costs.
We will remain focused on continuing to reduce costs across the board as we expect the oil price environment that we have observed since late 2014, including increased volatility to persist, which only stresses the need to structure, our business to be profitable across a much lower oil price range.
I'd really like to commend our operations team, which did a fantastic job of both shutting in production in may and bringing production back fully online in June while also achieving these cost reductions for the first time in my career and our teams history, we had to tell our guys to produce as little as possible every single day.
We executed this shut in operations and our field personnel did a great job of efficiently returning wells to production with little to no incremental expense and no adverse effects on our producers are wells have returned to their previous volumes with some wells producing at increase rates for a period of time.
Plus the three wells in Southeast Reagan County that were brought online in April prior to the curtailments and were shut in during May are now back online and have fully cleaned up and our preferred performing well versus the type curve.
I mentioned, we concluded our 2020 drilling program in late May and released our contracted rig operating in the Middle Midland Basin. So our planned capital expenditures are minimal for the balance of the year given that our program ended with 11 wells drilled, but not completed and with our ample liquidity.
We have optionality on completion timing depending on market conditions.
With production returned to full capacity, we have entered the second half of this year with expectations.
For no further drilling or completion activity. This year, we can maintain approximately flat year over year production in 2020 compared to 2019 as or Im sure. We recently updated our 2020 full year production guidance ranging from 13000 to 14000 Boe per day, which compares to 2019 full year.
Average of 13429 Boe per day.
Further with our 11 drilled but uncompleted wells in Upton County, we intend to carefully monitor commodity pricing appropriate service availability and service costs conditions to determine if it makes sense to bring in a completion crew later this year or wait until early next year.
Depending on the timing, we anticipate the completion of those 11 wells would enable us to maintain similar year over year production for 2021 with only a modest capital program for the completions, which we currently estimate at around $30 million.
With that overview I'll now turn the call over to Mark to review the financials have added Mark. Thank you Robert.
We have in the past two consecutive quarters I'd like to first discuss our cash position and our balance sheet. As Howard mentioned, we are pleased to have achieved our goal of generating substantial free cash flow in the quarter with a total of 35.1 million or free cash flow as we referenced in our first quarter call. Our plan was first to reduce our working capital deficit, which we can.
Excluding derivatives.
And were able to do this by well over $50 million during the second quarter, and then to begin to pay down our revolver debt the borrowing base under our senior secured revolving facility, which was set in late March remains unchanged at $275 million and should remain there and so our regularly scheduled fall redetermination process.
Our outstanding borrowings on the credit facility at quarter end totaled 168.6 million and we had 1.8 million in cash was 106.4 million of unused borrowing capacity that gave us approximately 108 million up liquidity at quarter end I wouldn't know that as of July 31st we had pay down our revolver by 14.
$3 million compared to quarter in reducing our debt balance now to about 150, 354 point Threemillion and we do expect to apply free cash flow the remainder of the year primarily to pay down the revolver.
During the second quarter, our capital expenditures totaled $3.2 million and year to date, we have spent $45 million of our annual 2020 capital budget of $50 million to $60 million as Robert mentioned, we concluded our 2020 drilling program in May So we anticipate minimal expenditures during the remainder of the year and will likely end up toward the low end of our guidance.
French now looking at our second quarter income statement, starting with the topline revenue for the second quarter, 2020, or $21.7 million compared to 45.1 million in the first quarter. The decline was driven by 54% decrease in all revenues to $18.9 million, which made up about 87% of total revenues and enjoy.
Our revenues fell by 44%, while natural gas revenues rose slightly.
Our average price and the second quarter for all three commodities was 17 to ours and 56 cents per barrel of oil equivalent which was down by nearly half of our average price during the first quarter by commodity our average raws price for crude oil in the second quarter was 23 hours from 56 cents per barrel natural gas averaged 83 cents per Mcf and NGL.
Average eight ours and 10 cents per barrel of oil equivalent.
From a production standpoint, our second quarter sales volumes averaged 13555 barrels of oil equivalent per day, which was comprised of 65% oil, 18% natural gas and 17% natural gas liquids as highlighted this does conclude having curtail about 60% of total production in may.
Okay.
On the expense side as Robert also highlighted we did drive down are all in cash costs from 12 92 per beauty in the first quarter to $10, an 11 cents per Boe in the second quarter. We achieved this through nearly $2 per BOE you reduction our lease operating expense to port Arthur 50 cents per view for the quarter.
On the general administrative side, we reduced our absolute casting and do you can expect by about 7% versus the first quarter, which resulted in per unit cash DNA expense of $3.34 per BOE eight as you know we reduced our cash DNA guidance in may to $15.5 million to $60.5 million for the full year.
And expect to be somewhere in that range watch at the bottom and as a 25% reduction versus our initial for your plan.
In addition to some of the savings would articulate the last quarter. We continue to focus on and have had success and reduce expenses really any in everywhere, including reduced uses a third for a third party consultants, reducing vendor rates and managing our cost tightly from an income standpoint, we were core we reported GAAP net loss in the second quarter of $35.9 million or.
55 cents per share, which included or pretax unrealized loss of 50 million ours, our derivative contracts. Our adjusted net income was $12.8 million or 20 cents per diluted share addressable diluted share for the second quarter. We reported adjusted EBITDAX of 39.8 million in the second quarter, which as Robert mentioned is actually an increase quarter over quarter.
Now, let's take a minute take a minute to update you on our commodity hedge results in the second quarter as highlighted we realized 29.4 million our gain on our commodity hedges for the quarter. This is largely reflective of our hedge position entering the quarter and our locking in some really nice gains on hedges. When we made the decision to curtail production and did that one second quarter buybacks.
Prices were about the lowest point the hedge realizations also included a gain of about $5.7 million from an unwind of 1000 barrels of oil a day for the second half of 2020.
We remain really well head for the balance of the year with an average of 6500 barrels per day of oil swapped at an IMAX price a $50 from 35 cents stepping down to 4000 barrels a day for full year 2021 at a nymex price of $55.16 per barrel with basis hedges in place on similar volumes on the natural gas.
Side, we have 7000 and be to you per day of swaps at a Henry hub price of two to ours and 85 cents for the second half of this year stepping up to 8000, and then b to use per day at a price of $2.71 for full year 2021, what basis hedges in place on the same volumes hedged romance.
A critical component of our financial strategy and we expect to continue layering on hedges as we get more visibility around the assumption resumption of our drilling and completion activity going forward.
Stepping back and look at expectation for full year 2020, we reinstated our production guidance in July and Weve reinstated OE and production and as Lauren tax guidance with our earnings release yesterday, our reinstated production avalor impacts guidance of six our 6.25% to 7.25% is identical to what it was at the onset over time.
20 guidance provided in January as is the case for our reinstated although we guidance of 550 to $60 per BOE weak. Although we have had recent sustainable eloise reductions and came in well below this range in the second quarter without the advantage of bringing on new wells. We have kept our guidance range, where it was a began the year when we anticipated, bringing 16, new wells online.
With that I'll turn it back over to Robert Thank you Mark we're really pleased with the results and confident in a bright future first while we are sorry to see our industry in such distress. It is creating more M&A opportunities than we have seen in quite some time, we're actively evaluating a number of situations and it.
Aspect to have more to consider throughout the rest of the year as prices remain low and distressed situations continue to increase we believe that our strong balance sheet and track record as if successful consolidator positions us well to increase the scale of our company and add value to our shareholders with that operator, we'll now open the floor for quest.
Once.
Thank you at this time will be conducting a question and answer session. If you'd like to ask a question. Please press star.
Your telephone keypad, a confirmation tone will indicate your line is in the question Q.
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Our first question comes from the line.
With RBC capital markets. Please proceed with your question.
Hi, Good morning, everyone hope are doing well I guess on the 2021 color that you gave about being able to keep production flat with the 11 docs is that more just meant to be instructive or is that actually how you're thinking about the 2021 plan as we sit here today.
Oh, yes, [laughter], a little bit of both Brad.
You know it it does depend on where commodity prices.
Head towards the end of the year, whether we want to pick up a rig or not I think we've been pretty vocal or consistent about our message that we need we need mid 45 to $50 oil to want to go back to spending large capital dollars.
But outside of that at some point ended this year early next year completing those wells will allow us to main production flat year over year.
Okay got it and then obviously you made a comment on M&A can you go into a little more detail about sort of what opportunities you're seeing and also any thoughts you have about an ability to fund them.
Opportunities are increasing.
And sizes.
Variable from small to quite large as you've seen you know distressed and bankrupt companies I think all of this will result in further.
Opportunities in terms of larger companies selling assets.
It it is difficult with no public equity and for that matter debt markets open or open only to a very few maybe we're one of those few but we've had discussions with financial parties, who are interested in participating with us on acquisitions and much.
Like we've done in our.
History will bring in parties at the right time to look at buying assets and we're going to maintain a.
Very healthy leverage amount and.
Keep ourselves from getting into that.
Distress no matter, where we are in the cycle. So I think we're just going to see more and more opportunities and we'll figure out how we can finance those and make sure we keep our balance sheet clean.
Okay. Thanks for the comments.
Thank you. Our next question comes from the line of Neal Dingmann with Truest Securities. Please proceed with your question.
When it all Robert for especially on the also on that same line on 20, what expectations that I'm just wondering why I realize this plan really I think at least once you've just initial laid out assumes no new wells really what's what im just wondering what's driving this low cost or another way maybe ask is how you think about maintenance Capex you know given just so.
So low because.
If I recall I thought Frank already had you all can sell those country club and other memberships I just know what else is there [laughter].
Yes, there is no country club memberships a up here.
You know.
I mean, the 11 wells, we have our in really good areas and they are they will help us keep production relatively flat at $30 million now is that sustainable.
So hopefully not.
We still have a relatively high decline rate.
And it does depend on when we brought those wells online if we waited till the very end of 21, Oh, we're gonna have a hard time keeping production relatively flat.
If we brought him on today, yeah, we might have the same problem because we get all this flush production from these new wells so.
You know maintenance.
To maintain 13000 BOE a day kind of level longer term, we're gonna have to have a rig running and a one rig program I don't know what it would exactly cost us today, but generally speaking is hundred 20 million to maybe 140 million depending on lateral length and working interest in.
Things like that so you know this is just a very preliminary if the world stays the same and we're at 40 ish low $40 environment, and we're not spending any drilling capital.
These 11, Ducs will help us keep production flat.
Okay, and then you kind of hit a my last one just on how do you think about sort of PDP decline on a on a go forward. It is now that you've been slowing a bit is that that too you know going to.
Go down or I guess look at another way is it.
Are you able to give us kind of how many how many wells would offset that and then in any way you can kind of give us a color on how did you know kind of you're thinking about that and 21 on broader terms.
Yeah, I think we've been consistent in telling.
Everyone that our sort of base decline starting today, we'll call. It you know is about 30% in the first year and then it gets into the mid to.
Maybe 26 or 27% the next year, and then low twentys or high teens after that and so.
You know I don't think Thats changed any and if we didn't spend any capital then you can kind of forecast what are.
Blow down.
Production would look like even if we didn't do those 11 wells, but again with those 11 wells it'll help keep 21 flat and then going forward in 22 and beyond its all going to depend on price.
Very good thanks, guys.
Thank you. Our next question comes from line of Jeff Grampp with Northland Capital markets. Please proceed with your question.
Yes.
I was wondering.
Robert or maybe some mark how important do you guys do you think free cash flow positive in the context of evaluating.
Whether to go after the docs and potentially drilling rig at some point in time would you view that as kind of.
No as a must if you will or would you guys have any level of comfort with any near medium term outstand could help you know if the returns.
Ill.
Jump started a return to growth.
Sure maybe I'll I'll try to answer that wasn't Robert can add on if he wants to you know we keep things pretty simple at the end of the day, we feel like our responsibility is to make good individual decisions at the wellhead and that's why we were quick to put the rig down and start completing and more.
On April is because the economics that make a whole lot of since then the deduction makes sense right now I'm an economically you definitely could go complete production right now and had pretty nice are ours for the incremental cost to complete them.
In terms of our we so focused on quarter over quarter year to year for you got free cash flow that we won't outspend no we're not in from a practical matter.
And we're just going to be free cash flow positive. This year next year kind of irrespective of anything else that happens what prices. If all we're doing is completing the ducks.
At some point, yes, we do anticipate picking the right back up and yes, theres a bit of obviously a lag there between the cost you expand to drill and complete wells versus the cash flow.
Does that mean over the course of year, we're not free cash flow positive no not necessarily.
But we're not so fixated on.
Checking the box every quarter, we want to make smart economic decisions at the wellhead that will flow into the bigger picture and having some outspend for some period of time.
Yeah, we still think of supported by the economics at the same time, you know we're not ones just to go keep drilling or completing because we have hedges in place or for other reasons. We're just trying to be as going to Stuart can of of the individual decisions, we're making at the wellhead.
Yeah. The only thing I'll add Jeff is I think we can run a one rig program with the level production and cash flow, we have today and be cash flow neutral on an annualized basis <unk>. Obviously, there's a jumpstarting. The program, we're going to be cash flow negative for a period of time, but I think longer term.
Over a year timeframe.
Again, depending on what the prices.
Sure understood appreciate those comments that my follow up and you guys still have.
A decent amount of non op exposure.
In the Permian are you guys seeing any activity levels, there and more on the land side is there any traction or conversations.
On swapping any that out to increase the operating exposure there.
Still working on the trades, but people have been hunker down in the bunker.
You know for quite some time now since you know at least March and so nothings moving very quickly. There. We have no we have not heard anything different from our partners in terms of activity in the near term being kind of the remainder of this year. So.
I'll have to see as we get closer to year end, what their view might be for activity in 2021.
Alright. Thanks.
Thank you. Our next question comes from line Dunkin Mackintosh with Johnson Rice. Please proceed with your question.
When Robert.
Morning.
Quick question on the balance sheet Youre doing great job in the free cash outlook looks great and it down wonder and.
In conversations with the banks as we head into the fall Redetermination back in March Youre early and getting it done in the spring but.
Bakken back then it looked like things would be pretty dire again in the fall in it it's not a bad here, particularly with the line of sight will have on the free cash kind of how.
Any conversations with them to give you any indication as to what.
Redetermination.
Sure I mean, probably too early to several anything around numbers.
But we do pretty ray talked at banks and when do we do that normal course irrespective of the environment.
Yes, the one thing I'd say I mean for US we are expecting a decrease in the borrowing base and need obviously, we're not drilling and completing new wells the hedges roll off.
Fortunately, we feel like we've got enough ability to pay down debt to outpace that decrease and really yeah, we don't see any scenarios.
We think are realistic that would be concerning in that regard now I will say why does environment full better now than it did three months ago absolutely.
And maybe some of that's the shock of sand minus 37, our oil and a unit.
Teen realizations for for the month of April and May.
At the end today, it's still a lot of very good price environment for for companies in general and the banks, maybe they feel a little better because werent $45 reporting $2 versus somewhere teens, but they still have a lot of issues to deal through to deal with it and obviously there.
Spent a lot of it'd be companies that have gone bankrupt and there's certainly more that we'll see the banks will have their handful and they're still working through all these situations.
I think there is a lot of trepidation on the banks part in general.
And yeah, I don't frankly see them, let it up a whole bunch and the fault, but now that being said that's a general statement, yeah, we've got onetime leverage and liquidity and generally are viewed as haven't done the right thing from a financial standpoint, and our assets or better.
And then many we probably feel like we've got a pretty supportive bank group that is.
As I got to be reasonable and fair and historically, that's been the case, but too early to to circle of number.
Thanks Mark.
And then I guess just from a follow up you. Robert you gave some some really good color on noted some pretty creative things to get down.
Second quarter I know you talked about how it's going to come back up a little bit here in the back half of the year towards.
More historical range that any of those initiatives that you took do you think that you could Jim Carey Ford.
Got it.
To get that.
<unk>.
Definitely done there's you know, it's just a constant progression of a wells lifecycle to adjust artificial lift.
A lot of our wells are on gas lift so relatively expensive compressors.
Over time that gets changed out to other lift methods in some cases rod pump in other cases plunger lift.
What have you so.
We're continuing to work through that and that will definitely help reduce ela, we and then some of the things that you know we were fortunate and getting done in the quarter working with the utility company to get meters that and get ahead of the schedule there or got moved up in the schedule from some good.
Relationships, we we ended up getting generators off of our payroll and those are very very expensive. So we didnt have a whole lot, but they still show up as a big expense. So some of these things we did in the second quarter are sustainable and we'll continue doing the right things in the way we operate our business.
Continue to watch costs like a hawk.
All right. Thanks, very much in congrats on a strong quarter in a strong outlook.
Thank you thanks, Doug.
Thank you ladies and gentlemen.
Back to join a question could you. Please press star one on your telephone keypad. Our next question comes from the line of Noel Parks.
Please proceed with your question.
Hey, good morning.
I know.
I you know I was thinking about the having the DUC inventory that where it works out that.
Jeff completing those next year given can help you keep production flat. That's you know that's a.
Not a really great flexibility you have there and I mean was that just sort of.
Oh result of the timing of everything you know kind of falling off the rails, where with covidien, Okay, Russia or our words was that.
Sort of part of the plan as you were just trying to you don't continue the pivot to.
On free cash flow heading into next year.
I'd Love to tell you know all that we had this great plan that no matter what happened in the world oil going to 20 or sub 20 that we could keep production flat for three years running with various amounts of capital.
If you go back and think about the beginning of the year and a call. We had you know related to the fourth quarter earnings in full year, we had a one rig program we were going to.
Average for the entire year, a tiny bit of free cash flow.
And those 11 wells would have been completed.
I don't know by now I can't remember, but pretty darn close so.
I'd say, it's a fall out of what's happened here.
And just being very conservative with our.
Capital expenditures and cash and making sure that you know we come out of this down this near term downs cycle, we've been in a down cycle since 2014, but at least this recent a piece of it that we you know we survived nicely through it and come out the other side and.
Can continue to find ways to consolidate and grow.
Great. Thanks, and you will just a housekeeping question sorry, if you touched on this earlier and I I missed it for the free cash flow calculation, if I looked at the numbers right. It looks like this is why those periods, where there was a.
Pretty big Delta between I should say cash Capex and.
Sort of Capex incurred in the quarter and I was just wondering for the free cash flow calculation.
Going forward.
Yeah.
Just kind of which which which one of those as it is more important number for us to users. We you're just just trying to model that.
We always use accrued cash.
From a calculation standpoint, because not all the bills necessarily have hit but we know what generally they are.
So okay. It's in that presentation on the last page or something like that.
Okay. So so.
Real Oh, and one other thing I and I, just don't have at least in front of meat and as far as change in working capital.
Yes, that's something off you good routinely.
Include well include the impact of and free cash calculation or would you exclude that.
Yes. So we don't include that and I recognize there's multiple different ways to to look at that I mean, the way we've been approaching it as okay. Adjusted EBITDAX is the best proxy for it really sort of cash flow for the period, a we back out interest expense and then we back out capital.
Miniatures for activity during that period now when you are stopping or starting there is going to be a bigger delta between broccoli and free cash flow the way, we do versus if you're using a cash capex number you know the second quarter was very atypical from the standpoint of here where.
Reporting 35 million to a free cash flow yeah, our debt balance went up and the reason for that is because and of course. This is tied to the cash capex for just the time at the payments yeah, we reduced the negative working cap the working capital deficit by about 50 million during the quarter.
Now were to a point, where that work indesit workout process. It is pretty low and probably will fluctuate a whole bunch, one way or the other until we pick activity back up a at which point you'd expect a yeah as you start.
Completions and drilling again, you start getting bills, but there's some lag between the activity and when you get to both than when you pay them. So very typical quarter, yeah. As we mentioned the press release, Yeah. We had about 169 million a debt at quarter end and the month in July we pay down a little more than 14, that's not the the run rate by the.
It's not fortune one quarter that was high because of timing, but we do expect I mean really every month. This year that we're paying down some debt without any big changes in the working capital.
Status.
Great. Thanks, a lot for the detailed it's tough for me.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Anderson for any final comment.
Well, we appreciate everybody joining us and you know will continue to update as a as we need to and we'll see you next quarter. Thanks.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.