Q2 2020 VAALCO Energy Inc Earnings Call
[music].
Good morning, everyone and welcome to the Balco Energy incorporated second quarter 2020 earnings Conference call.
All participants will be in listen only mode.
Should you need assistance. Please see no conference specialist by pressing the Starkey followed by zero.
After today's presentation, there will be an opportunity to ask questions.
The ask a question you May press Star then one using a touched on telephone.
With all your questions you May press star and too.
Please also note today's event is being recorded.
At this time I'd like to turn the conference call over to how Petri Investor Relations coordinator Sir. Please go ahead.
Thank you Jamie good morning, everyone and welcome to Balco Energy's second quarter 2020 conference call.
After I cover the forward looking statements Cary Brown, our Chief Executive Officer review key highlights along with operational results.
I was struck now our chief Financial Officer will then provide a more in depth financial review Kerry will then return for some closing comments before we take your questions.
During our question answer session. We asked you to limit your questions to one and a follow up you can always reenter the queue with additional questions.
I'd like to point out that we posted an updated investor deck on our website. This morning that has additional financial analysis comparisons and guidance that should be helpful. With that let me proceed with our forward looking statement comments.
During the course of this conference call the company will be making forward looking statements.
Investors are cautioned that forward looking statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward looking statements.
Alco disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise accordingly, you should not place undue reliance on forward looking statements.
These and other risks are described in yesterday's press release, the presentation posted on our website and the reports we filed with the FCC, including the form 10-Q that was filed yesterday.
Please note that this conference call is being recorded let me now I'll turn it over to carry.
Thank you all good morning, everyone and welcome to our second quarter 2020 earnings Conference call before I discuss our results I would like to reflect on the extraordinary challenges that we are facing as an industry and how balco is responding to these challenges that's far VAALCOS operations have not.
Materially disrupted by the global cope with my team and.
We have managed through the logistical challenges that we have faced since the outbreak and continue to put the safety of our employees and contractors and local stakeholders first we are minimizing high risk activities, while actively screening and monitoring employees and contractors, including testing in quarantines with.
Onsite medical supervision before going offshore we have contingency plans in place in the event, we are directly impacted by the pandemic, while the current pricing environment remains volatile in has recovered from the lows. We saw in April in response to the lower pricing environment, we have deferred all material.
Discretionary Capex this will allow us to focus on cash flow generation, while preparing for the REIT market conditions to begin planning the next drilling campaign and Tom.
We released the vintage drilling rig in early April after completing the 2019 2020 drilling program as planned on time within budget and with no safety or environmental incidents.
In addition, we have deferred or next drilling campaign until the global oil pricing environment stabilizes at higher levels. Despite this lower pricing environment, we remain confident in the long term viability of our inventory of drilling opportunities at Tom.
Another action that we have taken is managing operating costs to preserve our balance sheet and maximize cash flow, we've worked with our vendors and suppliers to implement cost cutting measures as well as partnered with other operators to reduce costs by sharing services and equipment, such as support vessels and killer.
Doctors.
We temporarily reduced compensation for our directors executives and certain non executive employees.
However, a portion of the cost reductions have been offset by higher costs brought on by the cobot 19 pandemic.
Despite this uncertain environment, we remain focused on operational excellence, which was demonstrated in our second quarter results.
In the second quarter, we produced an average of 5410 net barrels of oil per day, which was above the high end of our guidance range of 5000 to 50 5400 net barrels of oil per day. The strong second quarter production was a result of better than expected performance from the new wells drilled.
In the 2019 2020 drilling campaign.
Second quarter benefited from having three full months of production from all three of the new development wells drilled which were via Tom nine age that Tom 11 age and southeast to Tom forage.
We also benefited from a full quarter of production from the Threed work Workovers, where we restored production at the atomic Hen age atone for age and southeast and Tom to wage wells.
The second quarter production volumes from the new wells demonstrate the considerable impact that the drilling program has had on our overall production. Our 2019 2020 drilling program brought on line three new horizontal development wells drilled two successful appraisal wellbores and completed three works.
Overs.
This increasing volumes and proactive measures to manage costs has helped drive down our unit operating costs by 17% compared to the first quarter and improve our breakeven margins, which we are now estimating to be $33.50 per 2020 free cash flow per barrel.
As we've said before approximately 90% of our costs are fixed and we can add production and improve margins with minimal increasing cost.
In the second quarter, despite lower realized crude oil prices, we reported and adjusted EBITDAX of $10.1 million, an increase of $4.1 million compared to the first quarter due to higher sales volumes and higher realized gains in derivatives.
While these results were strong we do see some temporary headwinds to our production in the third quarter.
As previously announced in mid April of this year, the Seltzer ball with two wage well were shut in due to a downhole mechanical failure not related to the electric submersible pump.
Prior to going offline dwell was producing approximately 830 gross barrels of oil per day or 225 net barrels of oil per day.
Given the nature of the mechanical failure, we may not be able to repair the well into the next drilling campaign when their reviews on location.
In September we will be performing our planned six day full field maintenance turnaround on the non FPSO and all four production platforms on near term license.
Finally to assist debone meeting its OPEC production quota the minister of hydrocarbons has requested that balco temporarily curtailed production added Tom through September 2020, taking into account all of these factors, we expect our average production for the third quarter to be between 40 204.
4600 barrels of oil per day net to Balco.
In spite of these near term production constraints and because of the strong performance of our development wells in the first half of the year for the full year 2020, we are raising the lower end of the guidance range. We gave earlier this year from 4400 4700 barrels of oil per day net the new.
New full year 2020 production guidance is 4700 to 5000 barrels of oil per day meds.
Now I'd like to give you a quick update on our act activity in Equatorial DNA.
In November 2019, the equity broken May Ministry of mines in hydrocarbons approved VAALCOS appointment as operator for block Pete.
In the first quarter of 2020, Dulko acquired additional working interest from Atlas petroleum, thereby increasing our working interest from 31% to 43%.
The cost for acquiring the additional block P. working interest is a future payment of $3.1 million that will only be made if theres commercial production from block Pete.
We are currently waiting on an amendment to our production sharing contract, reflecting our updated participating interest and naming us as operator.
We are having ongoing farmout discussions with Levine hydrocarbon limited under the Farmout terms Levine will potentially cover all were substantially all of outflows costs to drill an exploratory well on what Pete.
Given the current pricing environment, we are evaluating the timing and budgeting for the development and exploration activities under development and production area in block P, including the approval of a development and production plan. The production sharing contract for block provides for development and production period of 25.
Years from the data for approval of a development and production plan.
We are optimistic that we will finalize the agreements with Levine and prepare for a drilling campaign that will commence in the next couple of years with minimal financial exposure to volatile.
In summary, we are committed to maintaining business continuity. This is a challenging time in the energy industry, but we believe that we are well positioned with a strong debt free balance sheet $45 million in cash and a stable production base that is free cash flow positive at current prices.
We believe these are advantage advantages for balco and help providing stability in the near term and flexibility for the future with that I will turn the call over to lives.
Kerry and good morning, everyone.
Our second quarter 2020, net income at point 6 million are a penny per share reflected the impact at substantially lower realized crude oil prices.
Which was largely offset by higher sales volumes as a result of having four liftings during the quarter.
Earnings were also impacted by deferred tax benefit at 3.4 million.
Adjusted net income, which excluded unrealized gains and losses on derivatives.
Deferred income tax and other operating expense was 5.3 million or nine cents per share for the quarter. In addition to the impact of lower crude oil prices and higher sales volumes just mentioned.
Adjusted net income included realized gains at 6.5 million from the final settlement on our mature derivative contract.
Adjusted EBITDAX was 10.1 million in first quarter, which was lower than the same period in the prior year, primarily due to a lower realized crude oil prices.
The impact of the low crude oil prices, partially offset by higher sales volumes as well as higher realized gains on derivatives.
Adjusted EBITDAX was higher than the first quarter told from also primarily due to higher realized gains on derivatives.
With respect to revenues the lower realized crude oil prices between the first and second quarters at 2020 was largely offset by the impact to the higher sales bias in the second quarter versus the first quarter.
Production for the second quarter at stake in order to net barrels of oil per day increased.
48% for the second quarter, 2019, and 9% for the first quarter at 2028 to the impact of the new wells coming online in late 2019 in early 2020 from our successful drilling Workover program.
Sales volumes in the first and second quarter 2020 were not closely correlated with production by it because the 85000 barrel listing.
That is scheduled for late March 2020, this delay until April 1st 2028, a poor weather conditions I.
I do though we had four listings in the second quarter 2020 totaling 631000 barrel.
Eric with two listings totaling 294000 barrels in the first quarter at 2020.
In addition volumes available to list increased in the second quarter 2028 day to the higher production rate funding may well.
Our crude oil price realizations fell sharply in the second quarter and were 59% lower than the same period in 2019, and 52% lower than the first quarter. This year.
Our derivative contracts are particularly valuable for us this past quarter as they generated our 6.5 million in cash settlement.
As of June Thirtyth 2020, we don't have any derivative contracts in place, but we will continue to assess our need to mitigate price risk and protect cash in the future.
Turning to expenses total production expense, excluding workovers for the second quarter, 2020 was 12.2 million or $90 in 31 cents per net bearable LTL.
Total production expense, excluding workovers was higher than either that or the second quarter 2019, or the first quarter of 2020 as a result at the higher sales volumes.
No workovers their performed during the quarter and we don't anticipate any for the balance of 2020.
Well production expense included approximately <unk> point 8 million in additional costs related to measures taken in response to the pandemic.
We have been able to offset these increases through various cost cutting measures as Carey mentioned.
On a per barrel basis at 1930, wherein we were below our guidance range for the quarter at 20 to $24 per net thereof.
Our personnel costs was less than that in the prior quarters due to the increase in production volumes for assisting us for drilling program and the fact that about 90% about production cost of fixed and don't rise with higher by.
For the first full year 2020, we are tightening the range for our production expense, excluding marketers to 37 to 39 million.
But because of the strong production performance, we are lowering our per barrel cost range to between 20 and $22 net Darryl sales.
For the third quarter 2020, we expect our cost to be between nine and 10 million or 20 to $24 per net barrels sales, while lower crude oil prices. It certainly had an effect on our financial results.
From an operational standpoint, we had not been materially impacted by the worldwide headed 19 pandemic.
Our guidance excludes any potential future impacts not currently being experienced and it seems that the opex mandate to curtail production is not increased or extended beyond September 2020.
89 for the second quarter 2020 was 2.8 million of $4.44 per net barrel of oil sales, which was below the midpoint of our per barrel guidance range.
The cost per barrel decline compared to second quarter 2019 in the first quarter 2020, because of the reduction in the field costs. As a result of the impairment charge that was recorded in the first quarter 2020 due to lower oil prices.
We expect our DNA to continue to be between four and $5 for net barrel for sales for the balance of the year.
General and administrative expense for the second quarter 2020, excluding noncash stock compensation expense was 2.3 million.
Good day decrease to combat the second quarter at 29 team and the first quarter 2020 was primarily the result of lower professional fees travel expenses and accounting audit.
For the full year 2020, we continue to forecast our cash today to be between 10 and 12 million.
Noncash stock based compensation expenses point 7 million during the three months ended June Thirtyth 2020 substantially all of which is due to the change in the stars liability as a result with the increase in the company stock price between March and June Thirtyth.
But that the second quarter, a 29 team and the first quarter at 2020, our stock price decrease which is which resulted in benefit from changes in the stars liability during those periods.
Turning now to taxes.
Second quarter 2020 income tax was a net benefit at 2.2 million.
This was comprised of a 3.4 million deferred tax benefit in a current tax expense of 1.2 million.
Foreign income taxes are attributable to the Barton.
And our settled by the government taking their oil in kind.
Current income tax expense of 1.2 million included 8.9 million favorable oil price adjustment as results of the change in the value of the government allocation between the time it was per days and the time that was taken in time.
After excluding this impact current income taxes for 2.1 million for the period.
The deferred income tax expense included a $4.1 million benefit to reduce valuation allowances on us and cavities deferred tax assets.
As detailed on slide 26 in the presentation deck posted this morning on our website.
We currently estimate that basket operational breakeven in 2020 will be approximately 26.5.
Per barrel per net barrels of oil sales and our free cash flow breakeven price will be approximately 33 point 50 per net barrel of oil cells.
Keep in mind that our realized prices, our benchmark to crude to Brent crude oil prices.
These breakeven prices have gone down this year due to higher production levels as well with lower costs.
These estimates do not include any impact from hedges.
In general terms, we expect that each $5 increase in realized oil prices increases our annual adjusted EBITDAC by approximately 8.5 million.
It's clearly shows our strong leverage to higher oil prices.
As mentioned earlier, our guidance excludes any potential impact not currently being experienced as a result of because at 19 team David.
At June Thirtyth 2020, we had an unrestricted cash balance at 44.8 million, which included 9.3 million a cash attributable to non operating joint venture on or advances.
This does not include an additional 13.4 million in short term in long term restricted cash, which is primarily related to deposits in design for feature abandonment costs.
Despite the challenges of lower prices adjusted working capital at June Thirtyth 2020 remain very strong and were substantially unchanged at 24.1 million compared to 25.8 million as at March 30 cars.
We have fully funded our 2019 2020 drilling program at a time from cash on hand, and cash flow from operations. So those costs are behind us now.
In the second quarter 2020, net capital expenditures totaled 1.2 million on an accrual basis related to 23.
As Carey discuss the ace or deferred discretionary capital spending and there are no remaining material non discretionary capital expenditures for the balance of the year.
Any capital expenditures made during M&A under a 2020 are expected to be funded by cash on hand and cash flow from operations.
We intend to manage any future capital expenditure levels in line with existing and expected pricing environment.
As has been the K since the second quarter 2018, we're carrying no debt.
With that ill now turn the call back over to carry.
Thanks lose while the current pricing environment remains volatile it has improved from the loans. We saw in April 2020, and we believe that the current prices will enable us to generating positive cash flow at current production levels.
Over the past several years, we've worked diligently to build a solid foundation for the future we've taken at least to strengthen balco operationally and financially, including eliminating all debt and growing our production base, which will allow us to better navigate cyclical energy markets and leaves us uniquely please.
Just to consider growth opportunities.
Alco does not have any material non discretionary capital expenditure requirements on the near term on the near term horizon, allowing us to focus on cash flow generation, while preparing for the right market conditions to begin planning the next drilling campaign at a tone.
Balco as a strong producing asset INBONE with significant upside we hope to repeat the success of the 2019 2020 drilling program and continue adding reserves and production through the life of our Tom license in component.
With the debt free balance sheet, approximately $45 million in cash on hand at June Thirtyth and the strong asset base has a Tom that is generating free cash flow at todays pricing, we have positioning vow cold weather near term uncertainties.
We expect to 2020 will continue to be a challenging year for our industry, but we are carefully managing our business with a focus on protecting our balance sheet and optimizing cash flow. Additionally, we will continue to evaluate opportunities that are consistent with our inorganic growth strategy and we believe that we are.
Well positioned to deliver long term growth in line with our strategic objectives.
Before closing our call I would like to welcome three new members, Kathy stones, torchmark slow and broad runoff to our board of directors.
We believe there are many years of experience in the energy energy industry will be very valuable for us as we move forward with our plans to position bouncing for continued success. Thank you and with that operator, we're ready to take questions.
Ladies and gentlemen, with that will begin today's question and answer session.
Ask your question you May press Star and then one using a touched on telephone.
If you are using a speaker phone we do ask you. Please pick up your handset before pressing the keys.
So it's all your questions you May press star into.
Once again that is star then one to ask your question.
Momentarily to assemble the roster.
And our first question today comes from Bill does alone from Teton Capital. Please go ahead with your question.
Thank you I'd like to actually start with your next drilling campaign with the current current oil prices. How are you thinking about that relative to the way you would've thought about your drilling campaign.
Had brand back say when it was $60.
Well, okay. So good too good to hear from you build so your question is how are we thinking.
Our next drilling campaign in light of today's prices versus.
Historically when prices were $60 or higher did I hear your question correctly.
Thats correct Kerry.
Okay right right. So we've run through the economics on our.
On the on all the wells in our portfolio and we would like to see.
Well the the wells on the investments our economic.
And at with oil prices in the low Fortys and so right now it looks like the just the drilling wells would be economic but what we want to see is not just.
Prices reached the lower Fortys, we want to see stability in oil prices and so thats, our thinking is well it makes sense probably to drill these wells as we see oil prices stabilizing in the lower forties and growing over time.
And with.
What you know today when are you thinking that you may or may be in the next drilling campaign.
What we are that's that's a discussion underway with internally in Balco and with our partners and.
We cannot.
Logistically its.
We can't started drilling campaign immediately it takes time to go out and find a drilling rig and purchase all of the equipment, we would need for drilling campaign. So it's 12 to 18 months out at best but we are talking to our partners about when is the right time to start making these early investments.
Ahead of a drilling campaign again, which include.
Equipment that we need where there's long lead times for manufacturing and then again finding a drilling rig so we're talking to our partners about what is the right time to start that process.
Great. Thank you and then one was the last time that of Alco was impacted by both EQT production cuts.
To my knowledge Balco has never been impacted by OPEC production cuts.
In a couple of years ago.
The bone rejoined OPEC. They had left and then a couple of years ago, the rejoined and we were not impacted.
In 2018, when when Opaqueness, forcing some production cuts it did not impact of Banco at that point and so this is really the first time that we've actually curtailed production in order to allows we're going to meet their okay quota.
Absolutely and then lastly would you please talk through your view.
Your acquisition pipeline and and how those opportunities are looking today.
Relative to how they may have.
How you may have you done in the past.
Well a couple of things the I would say the pipeline is more active than we've seen in the past which is.
Which is obviously very positive for us. So we are looking at opportunities that fit strategically we we do screen the opportunities we look for opportunities that fit strategically and so I think theres a couple of things happening number one it's our reputation as an operator.
We've demonstrated weekend execute a drilling program for example.
You know on time on budget, we've positioned ourselves well into whether through the current downturn and prices and so we're actually an attractive buyer I think can I think that has helped.
Generate some or increase the pipeline I should say of opportunities that we're seeing so and then.
Second we are seeing companies that are rationalizing their portfolios in west Africa, and choosing to divest of noncore assets and that that would fit us very well assets that might not make sense for us a large company.
Assets are producing they might have some development opportunities, but it just doesn't fit a large company, but that fits us very well and so we are seeing some of those opportunities come our way so I would say the.
In terms of the acquisition pipeline, it's as good as much better than it was before for those reasons.
In which you said some of these opportunities would come to fruition and or closure me you here.
Oh write a check or or pass on those.
Assets by the end of the year or.
Just for Covidien other reasons would discussions be slower than that.
It could happen by the end of the year I'm not.
I have nothing to announce right now, but no I think that.
The industry has learned to work through and work together.
In spite of the the challenges that we faced with the Pandemics. So something could happen. This year I'm not I'm not saying go that there is anything to announce but yes, there's there's still time for.
For something to happen this year.
Great. Thank you.
Okay. Thank you Bill.
Our next question comes from Charlie Sharp from Canaccord. Please go ahead with your question.
Yes. Thank you very much for taking my question I think the previous caller.
Asked most to see if the sort of big picture question. So I would have just one detail if I may.
The listings that you made in Q2 is a full listings did you notice Im sure you did if that was but was there a.
Change on the differential to Brent at those particularly low oil prices.
Were around and sort of April may.
Yes.
I'll take that Charlie the the April 1st lifting was done by the government. So they might have a different differential of brand because there.
As we valued at at the Tcl price, which is that an.
Finally, a slight change there.
For the other liftings those are going to be exactly the same different killer bread because.
Because of the way our are currently in contract works.
Okay. Thank you.
And our next question comes from Jamie Whelan from wealth management. Please go ahead with your question.
Okay all right.
The timing for the Oh, yeah. So.
We do or was that related to deserve.
ER curtailments or is just coincidental.
Okay and Jay.
Good to hear from you and so you're asking about the timing of the full field shut down for maintenance, including.
The FPSO is that correct and does it relate to the OPEC curtailment the timing of the.
The shutdown is late September and the OPEC curtailment.
Will lift we hope by the end of September but yes. The shutdown was included as part of our.
Contribution to the reduction in and our normal and our production volumes to help the this good bone meet their production Clovis, but it was really just coincidental, but to him anyway, yes. The timing of the shutdown. This late September and it will help contribute to the to the curtailed production.
Okay.
800000 hours spent on the on.
Uncovered costs during the quarter is that an ongoing or onetime charge.
No it's ongoing and we're finding ways to reduce that and so those are the extra costs too that.
We are burdened with because of the cobot 19 pandemic are related to the quarantines in the medical screening that I've talked about where.
When people.
When our employees are headed offshore we have to put them in corn team for two weeks ahead of their.
Head of their offshore trip and so we have to pay for housing for two weeks and then we pay for the the medical services that monitor them and and there's additional salaries that are paid so those are the additional costs, but we're finding ways to reduce that 14 day period was originally a 14 day quarantine we.
I think we've gotten it down to maybe a seven day quarantine. So anyway those costs will be ongoing, but we're looking for ways to reduce those.
One of your partners.
For bonuses.
Divesting some of their assets in the territory can you tell us about what that means for us and other opportunities for us to purchase theirs and that has had discussions with them.
Well I cannot talk about any negotiations until we have something to announce in so you're right. It sasol has announced that they are selling their upstream operations in West Africa and.
Presumably that will include the.
Sounds interesting a Tom and I will say is of course, we are very pleased with the Tom assets and if we.
If possible here, we would talk to assess all about buying their interest but of course at the right price.
So we're very happy with the Tom asset, we would consider buying more again at the right price.
But I can't I can't speak to any ongoing negotiations.
Okay.
And in a quarter or what is the long term hold up for getting.
The.
Mmm memorandum of understanding to final agreement what does what does the process. It seems like everything's ready to go there should it.
The terms.
And then the second part of that.
You were talking about a multi year point in time before we put Denver drilling program.
So what the characters and deserve credit, scoring which that.
The oil prices would have to stabilized.
Process. Once obviously all agreements are reached.
Okay, Let me, let me talk about.
The agreements that were negotiating and so the process we're going to is.
Levine and their technical team are doing conducting due diligence online on our technical work. So all of our mapping and our cost estimates and so that process is ongoing and in parallel we are negotiating with their commercial people around the farm out agreement and so there's no key terms in the form.
Not agreement to that need to be negotiated and so.
And that process is moving along not as quickly as I had hoped but it is still moving along.
In terms of predicting when we will finalize agreements. That's that's very difficult for me to estimate but it is the we are in progress and it is a high priority for so we're pushing this along as as quickly as we can.
And so those I I will report the discussions are ongoing negotiations ongoing it's a high priority for us I can't predict really when we will final finalize those agreements but in terms of.
[music].
What oil price is required.
To justify exploration on on block Pete.
100 to block the again its exploration and then hopefully a combined development with the discovery that's already on the block Venus and that's a that's that will take several years until first production and so we we have to take a view on long term oil pricing not near term oil pricing and.
Right now and it makes sense I would think that.
If there is a.
A negative view on long term world pricing.
When we when we make a decision to drill a well say in 12 18 months.
The only way, we would not make the decision, but I can't envision that.
The the long term view would be so negative that we wouldn't drilling exploration wells.
Okay. Thanks for from progress on Moms and the company Mr.
Our future growth.
Alright, Thank you Jamie.
Once again, if you would like to ask a question. Please press Star then one.
Our next question comes from.
Don Carson from RBC. Please go ahead with your question.
Yes, hi, thanks.
My question is obviously, we're we're in a good position from the perspective that we we don't have any debt right now but.
To the extent that a couple of the things you're working on either as it relates to an acquisition or a discretionary drilling campaign of of.
What whatever magnitude it may be.
To the extent that that capital is going to be required can you speak a little bit too some of the.
Funding mechanisms to get that done at this time thanks.
Sure sure I.
Let me take that in pieces for the.
For the organic growth that we're targeting from a Tom and drilling wells into Tom.
We believe we can fund drilling from cash on hand or cash from operations. So.
The only don't the extra funding or external funding we might require is if we do or is if we execute on an acquisition and so.
Not only the purchase price, but potentially these acquisitions will require capital or drilling.
After after we closed the transaction and so we of course looking at what cash we have available to put towards an acquisition and then we we are in touch with the debt markets and looking at.
What's the debt would cost and then.
The the other the other tool we have is of course equity, but I think I would you know where we want to raise raise funds in a way that makes sense and so but anyway, we're considering for an acquisition using some of our cash on hand.
Debt at a.
Reasonable cost and then if we need to.
Possibly raising equity.
Okay. I mean, so obviously all avenues are opened but at this time year sort of I mean, I guess it depends on the acquisition, but you're not leaning one way or another towards a particular.
A particular funding mechanism that you think is attractive from a general perspective versus what else is available out there.
Right, well know, where we're not necessarily leaning one way or the other.
We were looking I think I would rank things in the order that I gave you for an acquisition. Your first we'll use cash on hand, but preserve another cash.
Fund our investments at a time and then second as debt and then third is raising equity I would but we're not leaving.
Any any one way I think thats a fair statement.
Okay. Thank you.
[music].
And ladies and gentlemen at this time and showing no additional questions I'd like to turn the conference call back over to management for any closing remarks.
All right, what I would like to thank everyone for participating in our call and we look forward to speaking with you next quarter Goodbye.
And ladies and gentlemen, what that will conclude today's conference call we'd be thank you for attending.
May now disconnect your lines.