Q4 2020 Callon Petroleum Co Earnings Call
[music].
And gentlemen, and welcome to tell him petroleum company's fourth quarter and full year 2020 results and operating optically it cost.
All participants on it will be in listen only mode.
As a reminder, the replay of webcast for the call will be archived on the company's website for approximately one year.
Ill now turn the call over to Mark Brewer director of Investor Relations for opening remarks. Please go ahead Sir.
Thank you Chris Good morning, and thank you for taking time to on a conference call. Today with me. This morning are Joe Gatto, President and Chief Executive Officer, Dr. Jeff Balmer, our Chief operating officer, and Jim on our Chief Financial Officer. During our prepared remarks, we'll be referencing the earnings results presentation, we posted yesterday afternoon.
Our website, so I encourage everyone to download the presentation. If you have on already.
On slides on our events and presentations page located within the investors section of our website at Www Dot count on Dot com or under the general presentation page before we begin I'd like to remind everyone to review our cautionary statements disclaimers and important disclosures included on slides two and three of today's presentation.
We will make some forward looking statements during today's call the preferred equity and plans actual results could differ materially due to the factors noted on these slides on our periodic SEC filings.
Also refer to some non-GAAP financial measures today, which we believe help to facilitate comparisons across periods and with our peers for any non-GAAP measures. We reference we provide a reconciliation to the nearest corresponding GAAP measure you may find these reconciliations in the appendix to the presentation slides and in our earnings press release, both of which are available on our website.
Following our prepared remarks day, we will open the call for Q&A.
I'd like to turn the call over to Joe got it.
Thanks, Mark and thanks, everyone for joining us this morning, certainly glad to be back in the office. This week following a very different situation just week, one week ago on the state of Texas.
However, we clearly recognize the hardships that continue for so many even though temperatures have risen and basic services are mostly back on line.
And we certainly look forward to brighter days ahead for all.
Over the last several days and months our industry has once again been in the headlines on opinion polls for very good reasons.
The evolution of the broader energy landscape will not be an easy path certainly not moving a straight line.
Firmly believes that there is a substantial role for low cost sustainable producers like calendar play underpinning the global economy, and our way of life for years to come.
Focusing on that future our actions and decisions. This past year have enabled us to deliver on our promises to investors, including meaningful free cash flow generation and improved financial strength as.
Organization did a remarkable job integrating in a far from normal environment.
And from there was an impressive list of achievements on this page that came together to advance our debt reduction goals and over the second half of 2020, we were able to reduce our net debt by $350 million.
2020 was also here is our overall ESG program and sustainability initiatives progressed significantly on.
Preliminary admissions figures and flair volumes were much improved spilled volume saw a reduction of over 60% in our water recycling program continue to grow.
Safety has always been a court attendant of our business and this past year marked on new record low for total recordable incidents from the second consecutive year.
Importantly is progress is complemented by a change on the governance from.
We recently formalized responsibility for ESG oversight within our community structure, which will drive increased focus on accountability going forward.
Since it doesn't always get as much attention as the improvements on our environmental scorecard.
And to highlight commander employees engagements support of those in need during the stand demick.
Outreach the first responders support for our schools direct contributions to food banks. We're just a few of the way people accounts shows to make a difference.
We will be publishing more detail on these and many other topics in our next Saturday aligns sustainability report this summer and we will also be providing an update from the coming weeks regarding changes for compensation compensation design, which will include enhanced linkages to DSG performance.
Five seven provides a snapshot of our proved reserve base.
While more.
While the more than 30% reduction in benchmark oil prices certainly made an impact on our television 10 valuation the.
The fact that it only reduce total preserve that volumes by approximately 5% pro forma per divestitures.
To the strong margins and quality of projects from hearing on our asset base.
In terms of proved undeveloped reserves, we lower the number of locations within our development window to align with their moderated development activity and projected reinvestment levels.
Separately certain undeveloped opportunities removed as we continue with the application more tailored spacing in fact and designs and select operating areas.
And the right answer art provided an alternative forward looking view of our proved reserve value utilizing the same reserve database and development assumptions with the only change coming in the way of pricing.
Utilizing flat benchmark price hundred $50 per barrel per Wty oval.
$2.75 per <unk> per Henry has natural gas.
$22 50 per barrel for natural gas liquids or per reserve value increases to just over four 6 billion almost doubling from year and SEC pricing and highlighting a significant foundation improved reserve value and future cash flow generation potential.
I'll also point App.
TDP F&D cost just over $10.50 per bow.
The highlights are low cost resource base and will be a key element on the next slide.
After ending our first year full year reporting cycle and the combined company.
Have introduced additional details to provide investors insights and from building blocks of our balance multi based on model, which is outlined on slide eight.
On a total company basis or cash margins, including corporate and interest expenses is projected to be amongst the leaders in the industry it over $20 per <unk>.
This is a great chart that captures so many important elements of our business, including commodity mix.
Physical marketing strategy and risk management operating cost control.
And corporate expense management.
On paired with a low cost resource base that allows us to reduce our reinvestment rates, while sustaining reserves and production are strong corporate cash margins will drive long term free cash flows that are durable from periods of volatility.
As I've discussed.
Priority remains debt reduction, which will translate into interest expense production.
Once our leverage targets are met we see the opportunity to read that redirect those.
Those interest expense savings to shareholders over time.
Before I leave this page I'll point out a new element of our go forward iron materials and financial reporting.
We provided an overview of production realizations and operating costs for both the Permian an eagle per areas.
Overall, both operating areas provided support for resilient cash margins and significant flexibility for capital allocation decisions and diversification across physical pricing points and commodity myths.
As a follow on to our debt reduction priorities that are highlighted earlier slide nine illustrates our path to retaining our goals on that front.
As a baseline are $430 million operational capital budget for 2021 implies to 75% reinvestment rate based on $50 per barrel W. UTI.
We are committed to no more than this level of activity. So the implied reinvestment rate slowly moved down with a higher oil price outlook.
Looking out from 2022, and 2023 or 2021 investment plan will provide a optionality from multiple paths, depending on our outlook per commodity prices and capital costs after global supply and demand dynamics play out 2021.
Overall, we envision reimbursement rates was 75 per cent under these planning price scenarios that will generate cubital free cash flow of $500 million $800 million over the next three years and drive letters potentially below two times by the end of 2023, just from organic free cash flow, excluding the impact monetization.
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While divestitures are not explicitly captured in these numbers any transaction that we pursue much result in improvements to our credit metrics, an overall leverage profile from.
We recognize the importance of the lining the key financial metrics with the strength of our operations an asset base are very encouraged by the magnitude and paste improvements that we see in the coming quarters.
Before I can turn things over to adjust to discuss operations.
Thanks, Thank you joke on <unk>.
Just amazing job handling could rammed down and then return to activity 2020, all while driving down development and operating costs.
We put together a plan for 2021 that utilizes more consistent approach with activities and what we found ourselves having to do during 2020.
We currently have free roots into completion grease on the deal to kick start the year.
Well the other day back slightly towards the middle of the year, but the overall program should average roughly three rooms in one to two vs increase.
The balance activity across each gas injuries as depicted on the Pie chart.
Altogether, we are targeting no more than $430 million, an operational capital spending and that includes business seismically seen various facility improvements et cetera.
This should result in somewhere around 60 drilled wells in 95 complete equals bye.
And.
We continue to migrate towards larger average project sizes expecting an average of approximately five will per project and just under nine.
That'll be per well.
We discontinued level with fetal development on project portfolio for 2021, and we average project IRR of over 45% any just $45 mbti oil.
You may recall that.
Really targeting slightly low capital range.
But the support of discharge analogy that Joe covered in the previous line. Please electricity minimal in both of our Spain. This year.
Even with the slight change, we expect to generate meaningful free cash flow with a stronger production noted agreeing for 2021 that are prior forecast.
And speaking of production, we're getting very close to having everything back on line from the result of the stones and we expect to wrap up the remainder of return to production work into Delaware before the end of February or Eagle Ford is pretty much a 100 per cent of recovered and Midland based on production is right behind it.
As mentioned in our earnings press release, the impact was severe nearly all of our production offline for a period of time.
During this weather event or development activity was on that are in abundance of caution and while we probably lost a few days or efficiency has been so prolific zone very comfortable they'll pick those day back up without any issue.
At this point, we don't see any lasting effects other than the production approval and some minor spending for some facility repairs, which is darryl relative are low guidance.
I'll leave it up to the gym to update everyone on 2021 further guidance later in the presentation.
Before I move on to the next slide I wanted to take a moment to recognize our entire field operations team.
That efforts expertise an attitude of this team in the face of securities diversity, not just over the past two weeks with this extreme weather.
But it's very tough 2020 is truly remarkable.
You will work is acknowledged and appreciated raw extremely proud of weight perform and other before the progress he's having a stock it on to the park again this year.
On slide 11, a spent much of last few quarters outlining various levers we formed appeal to help drive operating costs down and increased production uptime on reliability.
At the same time, we focused on reducing our environment, so on impact and improving as a student of our natural resources.
It should come on Doser price that improving on field operations has benefited our ESG initiatives, while simultaneously knowing are lowering our lease operating expenses by the $30 million from both pro forma 2019 spending levels.
Optimization of our chemicals compression gas and water management programs for meaningful contributors to those savings this past year and we will continue to be areas of focus in 2021.
Some additional areas from concentration or.
Or the expansion of our Eagle forward electrification efforts, increasing on produced water recycling.
And dancing effort and surround tank pay per capture and those types of things.
On additional area on like to highlight is or pier, leading DSP runtime. So those are electric submersible pumps, which are down inside existing producing wells that run time is now well over a year, which reduces work over frequency and of course overall costs.
Moving the slides well, while our operating costs improvements have been meaningful our development cost savings and the extraordinary.
On Delaware costs are down more than $400 per that are included.
Representing 35% reduction from 2019.
Maybe more surprising has been our ability to cut our projected Midland based on development costs by almost half despite having a b a moving your assets.
Which reviewed much of this to continuing to acquire and analyzed data and examine and refine our surface and subsurface assumptions and practices continues.
The customized spacing programs, ladies zone optimization reduced water loadings in advance completion design and changed from before let programming all demonstrates the continued efforts to squeeze every last bit of economics on about portfolio.
These improvements oil faster cycle times are driving on pure level efficiency and low rating our overall economic free.
And that's all for operations, so I'm going to turn things over again.
Thank you Jeff starting to slide 13, you can see that are 2021 oil production has been hedge primarily with Nymex wdis callers, providing us with upside participation is price prices of Britain.
And the second quarter of 2020, we had an arvida all requirements the hedge a portion of the before 2021 Pvp production via a fixed price swaps. We have been active in restructuring of physicians to provide the best available cash flow protection and we moved Outta numerous swap executed.
True significantly lower commodity windows, and some more friendly callers as the year ago. We're also warheads and the first half of 2021, and then in the back half of the year, allowing us to Opportunistically top-off positions that occur continues to ship, though to me what appears.
To be in improving supply and demand equation.
We've been very patient with injury positions for 2022, and thus far but employing wide colors for the $45 or.
$60 ceiling with just over 3700 barrels per day locked in at this time.
We will continue to be patient and systematically employ protection for 2022.
It will likely lean towards mechanisms that provide meaningful upside with firm downside protection.
While natural gas makes up a much smaller portion of our physical production and revenue days, we have or is it $2 60 sales per Evan Btu for just over 60000 Mcl was upside the 285 per M and Btu on average.
At the bottom right of the slide we provided a sensitivity analysis of realized pricing post the hedge impact of our curve positions.
You'll note are projected realizations climbed meaningfully in the second half of 2021.
Coinciding with our ramp up in production.
Turning to slide 14, I will say that looking back into last year I'm happy to say, we've made significant progress in improving the amount of our RVO in total debt outstanding through our secondly, offering exchanges monetization and the continued focus on free.
Cash flow generation.
And the chart on the left you can see where we have significantly reduced the outstanding borrowings on our credit facility alongside in net debt reduction of nearly 350 million since the end of the second quarter.
We will continue to review all of the options for additional reductions that leverage and we'll evaluate these opportunities as we manage our desk maturity.
Page 15 speaking of maturities. Our earliest maturity is the 2023 senior notes.
With a significant reduction in our credit facility borrowings the improved opportunity for significant free cash flow generation total of the.
Coming next three years and what has been a resurgent high yield market, we see several avenues to continue improving our capital structure and financial flexibility as Joe mentioned earlier, we are still looking at additional monetization opportunities this year to increase or.
That reduction year term.
I'd like to point out that we have set a goal of having our net debt EBITDA below two and a half times by the use of 2022.
516 provides are update guidance for the full year 2021.
Some of this has already been covered by Joe and Jeff already but I do want to point out some important points.
Our annual production guidance is 90 to 92000 per day.
Average approximate oil COVID-19, 63%.
The Doctor.
Hello from the winter storm impact of roughly 2000 per day on an annualized basis day.
Upon that impact we currently expect the first quarter to average somewhere around 80000 per day with an oil cause likely closer to 62%.
Given before meaningful improvement in lease operating costs.
Point of guidance of $200 million, which is below the bottom end of last year's guidance range.
G. P&C is slightly higher on an annual basis. This year, but this is the first time with the fourth quarter impact, reflecting our firm transportation capacity for the Gulf Coast, We only began recognizing as a meaningful line item.
Second quarter reported toilet.
We are budgeting for operational capital of public to $430 million.
This is a 12% reduction from last year spending levels and well below last year's revised guidance.
As outlined in the earnings release, we are currently running three rigs and to completion cruise during the first quarter.
So we would expect first quarter capital to be a bit higher than a pro rata, 25% of the annual operational capital expense.
With the wrath of completion activity expected through the second quarter. We would also expect it to follow suit and end up slightly higher than the first quarter.
At this point and I'd like to turn on the call back over to Joe Thanks, Jeff.
Passenger share their team highly capable of managing through extraordinary circumstances, and find creative and thoughtful ways to protect enhanced value for our shareholders.
Investors have spoken we have listened.
Our goals are clear achievable our leadership on board are keenly focused on optimizing free cash flow generation, reducing our den obligations.
Thankfully and efficiently maximizing the value of our assets and achieving our sustainability goals.
We will continue to present count value compensation on ways to create a durable low cost business that can return capital shareholders on net debt is reduced or target levels.
That turn it over to Chris for open up.
Okay.
Okay.
Thank you very much.
Okay.
The question on.
To ask a question Tonight.
On your telephone keypad.
If you're using a speaker phone.
Before procedures.
Which would you prefer.
Cute.
Pieces from nine to ask one question and one on on.
After which you on welcome to rejoin from.
More questions.
First question vs from Neil Kinnock.
She just keeps going on.
Good morning. So my first question is really just kind of on completions maybe brought her about this it's been interested in some of your peers and most of that type of about this have have seem to have for whatever reason have gone to maybe what I'd call. It tighter focus they've they've focused on fewer zones. They focused on wider spacing maybe even in.
More sorted.
Less broad areas, where you all have been able to sort of continue with this you know.
What I would call more diverse plan on all those facets mean could you talk about will that continue to be the plan and are you able to do that just because you continue to see.
Strong enough returns when when that when that's been the case.
Okay.
Yes, I think your your last comment sums it up pretty well I mean, there's a lot that goes into that but.
Talked about it has been very consistent in terms of our what we call life a field development approach, we've been substantial multi zone resource base certainly in the Permian employing.
Employing a scale model, which was a big thesis obviously the decrease our transaction.
To allow us to have the critical mass to co developers are on the right way now that's not to say that we're chasing every zone that we see in the back I mean, we are making decisions.
Zone to to help carry their their way, but given the strength of multi zone opportunity.
We say that there is extreme value to capturing them and not letting them degrade over time and Cherry pick what we have so this is all about sustainability of overtime and trying to get to focus on the near term you're going to make decisions that will impact longer term value.
Got it got it and then do on my second question pay per year gym.
That definitely it's not lost your what you'd call you're sort of longer day to plan that obviously has that coming down nicely, but you can't help but notice not only is the equity have been on a nice from the last few weeks, but obviously the credit or the bonds have as well. So I'm just wondering would that said.
Are there you'll be probably talked about this in the past I don't know because the credit has run like it has like the equity.
Cost of capital now is cheaper are they are going to be potentially other opportunities sooner than that or is look or do you sort of stick with lookout on on the ball is still going to be on that longer term plan and if something comes up so be it and I'm. Just wondering how you are kind of view on the near term vs longer term plans.
Hey, Neil this gym.
All kind of answered that briefly and that a Joe has anything to complement it with.
We have said.
Pretty continuously for the better part of the year priority number one is absolute debt reduction.
But that day.
A refinancing or something along those lines of some of the near term maturities would give us additional runway for free cash flow generation.
Your point is well taken that the capital markets appear to be improving.
We we've tried to really look at what the best.
Opportunity is at the time and I think you'll see us continue to do that but again, it's about absolute debt reduction, it's about free cash flow and and just continuing to evaluate opportunities as they come up Joe I don't know if there's yes, hi on it.
Finally laid out with a free cash flow generation complemented by.
I think a reasonable monetization targets that we think can expand in this type of mark underpinning.
Our options are only get expand more we continue to execute on that that baseline. So we'll be opportunistic and if they are saying that makes sense.
Of on our capital markets will certainly.
Waiting all of those that we do every day.
So.
Does that mean with a refinanced being you would you would consider even buybacks on the open market given I guess, what some of these bonds are still kind of subsidy. It would would you talked about refinancing gym I guess, that's what I'm wondering is it is it how do you think about is that refinance pretty broad as far as either traditional refi are going back on the open market.
Yeah.
Good point, what are the things that you've seen as our bonds have traded up.
In the seventies and eighties.
As I look forward into the year I think one thing that could make says would be open market repurchase.
But again.
That will be on an opportunistic basis, and we're going to focus on the free cash flow generation. The other initiatives that Joe mentioned and it really just keep keep methodically moving forward and getting that that bill.
Very good thank you.
Okay great.
Thank you and the next question is from Scott panel of on a B C. Please go ahead.
Yeah.
Yeah. Good morning, you just kind of curious on that longer did it I'll look through 2023, I'll head, obviously on the 2021 outlook.
Do show a fairly balance development plan can you give us some color and flavor like how that progresses over those other couple of years and.
Also maybe a little bit of color on where you see the IRS of those opportunities. Good to you you had mentioned.
Was there 45% IRR on the 2021 plan, how does that look and mix and returns going forward.
Get a project portfolios is excellent so we would anticipate.
On the tests on project returns to be.
Sustainable from England years.
Joey mentioned.
Find the development program has has been consistent for for multiple years in the past and moving forward.
We evaluate the full stack.
We have a very.
Well developed proprietary.
Set of data an algorithm that determined way we should.
Make sure that we get a while we're out there.
One or $2, maybe we can come back and giving me at a later point in time, but I would say that their project portfolio is is excellent and sustainable.
Okay, and the mixed with the mixed day fairly balance.
Yeah, and thank you for reminding me yet.
Obviously that there's more runway and in Delaware, which are.
Fantastic in terms, but we still have a firm.
Trailing to do that and do you prefer it in Midland Basin. So for the certainly for the next couple of years, you'll see that continued mix of assets.
Okay, Great and then.
Looking at those would cost obviously you guys are really pushed the envelope on on getting costs down on a dollar per foot basis and.
It seems like you're obviously.
Lending some day to show that you think there's some sustainability, but you know again, maybe reflecting obviously with the the 2021 plan.
Firmly out there, but like if you look at 22 23 again.
Can you sustain those costs that low or would you see some pressures.
If you were to see some.
Sure and that's in.
<unk>.
Fantastic question premiere and efficiency standpoint.
We made improvements every year and so we.
Continuing to.
To reject that will get better and better at what we do dropping down the overall costs and cycle times.
So on contractual standpoint on partnerships with our vendors.
The reality evidence we're in.
65 dollar oil or whatever the number is.
We would all expectancy cost increases potentially but there would be more than offset by the agreements and free cash flow.
You don't feel like we have a lot of exposure.
2021.
We've got a lot of good.
Contractual.
Putting place.
So I think.
It would be a good problem to have an costs going up because making a lot more money on.
Right.
Okay.
I'm just kind of curious if you could give us some sensitivity around that like you know what.
And we were to say C. A kind of a 60 dollar kind of outlook on.
On those out years, where do you think the sensitivities on some of those costs.
Overall.
Using a day of a crystal ball on that forecast again, and focusing on 2021, we're going to be well in pain.
A couple of percent, maybe if we see some upward prices on.
On the back half of the year, but can you look back and you you glued together.
Historic well costs have been based upon.
And the contracts vs. The efficiencies.
Anticipate that will have a significant negative.
Effect on the overall cost structure and again, just reiterate from a profitability standpoint will be even better and higher oil prices.
Understood things.
The next question is from time down on me.
Okay.
Good morning, and thanks for taking my questions for Jim or Joe as you think about the the free cash flow and debt reduction targets you've laid out on slide nine are you approaching either the pain or strategy of hedging any differently entering this year you. Jim I know you mentioned you started on the 2022 hedging programmed it but does that the medium.
<unk> strategy changed around hedging as you're thinking about this through your goalposts.
I would think generally we've hedged.
During the calendar year somewhere in the 60 to 65 per cent range I think that's probably a pretty good approximation there may be moments, where we opportunistically go higher than that but I think generally that's right I think as we look at 21 and 22 and 23.
Sequentially.
The thought would be to use.
You know things that half price participation as I said, but for downsized. So.
Potentially swaps colors or puts those types of.
And then I think really was.
What's maybe different going forward in 2022 is that will will really be focused on kind of what that free cash flow breakeven prices and make sure that the weighted average force that we have are supportive of generating that free cash flow over the.
Over the coming quarters.
And I guess at the time horizon over which you're extending those hedges is that going to be pretty similar on would you start going out any further than normal.
I think.
I think we'll be looking very closely at 2021 per replaces the optimizer or maybe later in the second half the hedges that we have in place right now are really first and second quarter of 2022.
So we'll be methodical about it and kind of layer. It is it makes sales.
And again part of that will be just driven off of what the curve does in 2022.
I think we'll end up 2022 and a similar.
Absolute level.
And I think we'll be watching that over the next couple of quarters.
Great and then from a follow up question, Jeff How you continue to make progress on the capital efficiency cronje per per some of the other questions. This morning.
You talk about scale development program I believe you mentioned the five well average project size for this year I'm curious what else you're thinking about you know for the Doc in it for for 2021, you've heard others in the industry to talk about things like electric Fracs and Simon Fracs I'm curious if your view of your current program and pad size, it's conducive to trying some of the techniques.
Either this year is that through your planning period on boats.
And then as as a matter of fact, we have converted over to Eugene breaking.
Bringing in getting up and running a dual fuel.
Completion true.
Really excited about.
Based upon the recent whether I think we're going to start with diesel for the first bad and just make sure everything works just fine, but you're going to do on people.
Entire year of 2021 on that track room, and then we will also be testing and electric practically.
Independent set.
Set a world and development program that we have here towards the end of Q1 or the beginning of the queue.
And it has.
<unk> other projects that are on your way that we've touched on a little bit by bit.
On you is focused on electrification project from a eagle burned in some other areas talent has three substations that went on and operate that.
Really help them from the reliability Dropdowns immunity system. So yes, all of that stuff is not only on the plate will be being on June 2020.
Okay I appreciate comments.
Thank you very much data from James and then just to remind you wish to ask a question. Please.
One.
The next question is from there.
Peace day.
Thanks, and good morning off.
<unk>.
Per perhaps for jeweler gym.
Irrigator generated guidance in the face of material whether impacts from Q1 with seemingly suggest the higher 2021 exit right and she noted on your prepared comment.
Could you share with us the shape of your production trajectory and where you would expect to exit the year.
Alright.
Coming off of the first quarter, obviously, a meaningful impact there.
At 221 before the storm.
Could it be share.
It was a little bit lower in the first quarter before we started working through that dark inventory at a substantial amount of completions in the first half within 55.
Or so so we have that increase trajectory going on the second and third quarter.
And turned it back to the right way and put that out there yet I think we're making sure we get past the storm and reconfigure things in the right way, but.
Certainly we're going to see a pretty hefty increase of first quarter is the second and third quarter that will certainly impact on on fourth quarter and give us some momentum of 2022.
Great that's fair and perhaps from my my follow up sticking with you.
[noise] team is is really navigated this environment about as well as any rink.
Regarding the additional asset monetization of 125 to 225 million that you referenced in your press release.
Could you speak to the nature of this asset included in the health of the Andy market for those assets.
Yes, certainly.
Certainly address here first comments take that.
I've done a remarkable job. So I appreciate you recognizing that.
And putting.
In a position to take advantage of the opportunity steps in front of us and we've been patient on on the monetization. We able we were able to get some sales done last year the rate transaction for that type of a market.
We had.
<unk> based on your classic working interest transactions last year, because we just didn't see that the value proposition Sarah within the same path getting transactions done it would be that would be credit enhancing.
So as we talked about last year, when we established our $300 million to $400 million target on the back of the pretty low transaction there was.
A lot of opportunities.
In other words, a lot of ways to be right. So we still have that that brought pool just a lot more of them are back on the table. So we.
We have a couple of packages.
And the Delaware on the Eagle for that we've been looking at overtime again, we did push it we've been patient and I think that patients who.
Who will pay off her we've maintained the dialogue importantly momentum so and windows open up will be able to hit those markets pretty quickly.
The water business, we've talked about.
Over the last.
Few quarters certainly.
As an opportunity to monetize that asset and also could actually modify from the late and capacity in that in that system.
Again be patient there is allowed us to put forth. The plan. We did today right to show potential bidders that we have a sustainable plan, we have the free cash flow with it when you.
Look at the at the based on your not going to heavily risk. It because there's also uncertainty we've show on the path.
For potential bidders at this point, but.
Sign up for these types of water volume the value of them.
To deliver that and then so so.
That continues per se, but.
Getting a volatile market and yes, it's been a lot better last month or so.
We can't just follow up with any one path, where we got to keep a lot of doors open will continue to do that and hopefully the update everyone on the coming quarters on that from.
Very helpful very enough day, thanks for your time.
Okay Sir.
Thank you Sydney Christians from done awesome.
Yeah.
90 there.
Yeah, sorry, I was on mute.
For sure on the car.
Just just one quick one from me.
Talk a little bit about how you felt about ducks historical you know a little bit of a bump on capex.
Exit the year was thinking I'm kind of where did you come in to the year with dogs and kind of what's an ideal level that you think about kind of keeping in the program over there there's kind of two to three year plan that way now.
Yeah.
Yeah, where are we safe.
My budget I think there has been on feedback.
Before we came into 2021 and grew kind of in the mid sixties give or take from duck count.
We had.
Very.
Red ready to sit on our assessment of capital spending 2020 until.
He came in from here, a little bit higher than normal.
And year 2021, with the current gameplay roughly half of that going in.
Eight 2022.
Good it's supposed to be from the where we said relative to the capital program and having.
Honestly consistent production, where you don't see those significant peaks and valleys. So that's kind of moving soon I guess the other items I mentioned is.
All of US are of course, not created equal so where we came into 2021 word.
Oh, probably half of those were sitting on the Eagle for which are very proper moment smaller wells from a production standpoint.
The next right now going into 2000, 2022 will represent a higher percentage of one on feeding the courtesy Mason vs.
Alright, great. Thank you.
I think that.
Thank you very much.
Most of the questions in the queue and this concludes on question on suspicion.
On oxygen.
To install a government doesn't come on.
Thanks, Chris that get for everyone on July.
I think if I had some audio issues off and on so it will certainly get that transcript out there and please feel free to give us a call with any follow up question, but hopefully.
It wasn't too bad again, we look forward to talking to you all and May in with first quarter earnings and.
In other update thanks.
Thank you very much.
Nathan Jane Smith from can you too.
Thank you for attending today's presentation, you may know.
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