Q4 2020 Centennial Resource Development Inc Earnings Call

Okay.

Good morning, and welcome to Centennial Resource Development's conference call to discuss its fourth quarter and full year 2020 earnings.

Today's call is being recorded.

A replay of the call will be accessible until March three 2020 that Darling 855.

8592 056 inch.

And entering the conference I day number now 171897 or by visiting Centennial's website at Www Dot C. D E B I N C dot com.

At this time I will turn the call over to Hays Mabry Centennial's director of Investor Relations for some opening remarks. Please go ahead.

Thank you to wonder.

And thank you all for joining us from the company's fourth quarter earnings call.

<unk> on the call today are Sean Smith, our Chief Executive Officer.

George Calippus, our Chief Financial Officer.

Matt garrison, our Chief operating officer.

Yesterday February 23rd we filed a form 8-K with an earnings release reporting full year 2020 earnings results for the company and operational results for our subsidiary Centennial resource production LLC.

We also posted an earnings presentation to our website that we will reference during today's call.

You can find the presentation on our website homepage or under presentations at Www Dot C debt, Inc. Dot com.

I would like to note that many of the comments. During this earnings call are forward looking statements that involve risk and uncertainties that could affect our actual results and plans.

Many of these risks are beyond our control.

And are discussed in more detail in the risk factors and the forward looking statements sections of our filings with the SEC.

Including our annual report on form 10-K for the year ended December 31 2020.

Which will be filed with the SEC later this afternoon.

Although we believe the expectations expressed are based on reasonable assumptions they are not guarantees of future performance.

And actual results.

Or developments may differ materially.

We may also refer to non-GAAP financial measures that help facilitate comparisons across periods and with our peers for any non-GAAP measure we use a reconciliation to the nearest corresponding GAAP measure can be found in our earnings release or presentation, which are both available on our website.

With that I'll turn the call over to Sean Smith, our CEO.

Thank you Hayes.

Like to start off by extending our thoughts to all those who have been impacted by the recent severe winter weather events, which includes our employees in west, Texas and southern New Mexico.

As always our top priority is our employees and their families health and safety, thus I'd like to personally. Thank all of our team members as last week was a challenging time for many.

As a result of their hard work and dedication were currently in the process of restoring our operations back to normal levels, while Matt will speak in detail on the impacts of the winter weather I'm confident our team will have our production and operations fully restored by the end of this week.

As we reflect on 2020, it was certainly a challenging year for the entire E&P industry, but I am proud of how the centennial team handled such a difficult time.

The substantial cost reduction initiatives in G&A, LOE and D&C all contributed to the company successfully transforming into a free cash flow generating entity, which has allowed us to begin to delever organically.

I look forward to carrying over those traits into 'twenty and 'twenty one as we continue to focus on the balance sheet operating costs and capital efficiency with that I'll turn the call over to George to review the financial results of 2021 and the guidance.

Thank you Sean I will first review the fourth quarter results then highlight several key takeaways from 2020 before summarizing 2021 guidance.

As you can reference on slide 18 of the earnings presentation Centennial's fourth quarter net oil production and total net equivalent production averaged approximately 30250 9700 barrels per day, respectively, which was down about 13% from Q3 <unk>.

Despite lower production levels revenues for Q4 totaled approximately $148 million, which was essentially flat to Q3, primarily as a result of stronger oil prices for oil Ngls and natural gas.

Excluding the impact of hedges centennial's realized oil price was $40 36 per barrel for the quarter compared to $36 $90 95 in Q3.

Natural gas and NGL realized pricing increased 53% and 40% respectively compared to the prior quarter.

Shifting to cost as previewed by our annual guidance update released with Q3 earnings our Q4 LOE per barrel increased relative to Q3 levels, but remained relatively flat on a notional basis.

LOE per barrel increased 20 by 24% from Q3 to $4 78 per barrel.

Primarily as a result of the anticipated decline in production as well as a slight uptick in electrical and water disposal costs overall.

Overall, we have continued to realize the benefits of the significant structural reductions we've made to low throughout 2020.

Cash G&A for Q4 was essentially flat quarter to quarter at $1 96 per barrel, but notional G&A declined by approximately 12% as our cost reduction initiatives continued to take hold.

<unk> expense increased 8% to $3 27 per barrel driven in part by higher gas prices reflected in our percent of proceeds contracts.

D&A decreased by 3% to $13 62 per barrel, primarily because of upward PDP revisions.

For the quarter, we recorded a GAAP net loss of approximately 89 million debt was impacted by $19 million of unrealized hedging derivative losses and $40 million of noncash impairment expense related to expiring acreage that we don't intend to drill.

Adjusted EBITDAX totaled $79 million, which is up approximately 55% from Q3.

Shifting to Capex centennial incurred approximately $30 million of total capital expenditures during the fourth quarter compared to $22 million in Q3.

We ran a single rig during the majority of Q4 and added a second rig as well as the completion crew in late December.

We spud two more wells than expected due to increased drilling efficiencies and ended the quarter with seven gross wells spud and none completed.

The $30 million incurred D&C capex was $24 million and facilities Capex was 4 million. The majority of the facilities Capex was spent on wells that will be completed in Q1 2021.

The modest amount of remaining capital was spent on infrastructure and land.

On slide 12, we summarize our capital structure and liquidity position during.

During the fourth quarter, we utilized free cash flow to repay $25 million of borrowings on our revolving credit facility, leaving $330 million balance at December 31.

This was the second consecutive quarter that we paid down borrowings with free cash flow, which has increased our liquidity to $340 million from $297 million at mid year.

Turning to leverage statistics centennial's net debt to last 12 months or LTM EBITDAX was four one times at 12 31.

And net debt to last quarter annualized or L. QA EBITDAX was three five times, we are presenting the <unk> leverage metric for two primary reasons first our production base and overall corporate decline have been materially reset over the past 12 months because of the curtailment of drilling and completion activity in response to lower.

Oil prices and secondly, our cost structure, particularly LOE and G&A has been significantly reset lower.

In short I believe the <unk> EBITDAX metric is useful since the second and third quarters of 2020, which are captured in our LTM EBITDAX calculation.

<unk> significant cash hedge losses and are therefore, not representative of the current state of the underlying business.

It is important to note that because of our projected free cash flow generation. This year, we expect to continue to reduce debt as a result year end leverage is forecast to be below two five times, assuming current strip prices.

Additionally, we will continue to explore ways to accelerate that path if it enhances long term value for our stakeholders.

Finally, our maturity profile, which is illustrated on slide 13 provides a significant degree of financial flexibility given that our first senior note maturity of $127 million doesn't come due until 2025.

Before turning to 2021 guidance I'd like to make a few observations to put 2020 and perspective from a financial standpoint.

First despite the turmoil of 2020 at a sub $40 average W. Ti price in the aggregate centennial's total debt increased by only $28 million during the year too.

Approximately $1 1 billion.

This limited increase was driven first by the debt exchange that we executed in may that reduced total debt by $127 million the.

The second driver was the temporary suspension of drilling and completion activity back in April coupled with cost reductions that minimized our deficit spend and positioned us to generate free cash flow in the back half of the year, which resulted in an additional $40 million of debt repayment. So while leverage metrics increased as a result of declining cash.

Flow, our notional debt position was largely held in check.

Second with respect to capital and production. It is interesting to note that of the $255 million of capital incurred during 2020 nearly.

Nearly 70% was spent in the first quarter before the pandemic fully took hold as.

As we largely suspended activity levels for the balance of the year, our production base and corporate decline were significantly reset having recently resumed drilling and completion activity. We expect to stabilize the production base during 2021 and put centennial on a more gradual growth path in the future assuming a supportive commodity backdrop.

Additionally, any future growth is likely to be more efficiently delivered from a capital standpoint, given our shallow corporate decline.

Finally during 2020, we implemented a more systematic hedging strategy.

Utilizing both swaps and Costless collars that has two primary objectives.

The first is to protect our cash flow and balance sheet. So that in periods of unexpected oil price declines such as during the COVID-19 pandemic.

We can continue our baseline of drilling and completion activity without incurring significant deficit spending or significantly increasing our leverage metrics.

Maintaining steady operational activity can also enhance important operating efficiencies in order to keep costs down.

The second objective is to make sure our cash flow covers basic corp, corporate costs, such as interest and G&A expenses importantly, we're very mindful to give our investors exposure to oil price upside that can enhance our deleveraging path and drive shareholder value through higher cash flow.

In the aggregate for 2021, our hedge positions cover approximately 47% of our annual oil production at the midpoint of guidance with a weighting towards the front half of the year you can reference our full hedge positions on slides 19, and 20 of the earnings presentation.

I'll now turn to 2021 guidance, which you can reference on slide 14.

As announced in our release yesterday, we expect to run a two rig operated program this year.

This program will allow us to spud and complete roughly 43% to 44 gross wells at the midpoint.

As Matt will touch on shortly this represents a material reduction in cycle times compared to previous years, which is driven by our recent drilling and efficiency gains.

121, P CNS, capex, which includes drilling completions and facilities capital.

<unk> is estimated at $270 million at the midpoint with the remaining $15 million allocated to infrastructure land and other capital in total we expect this capital program to generate midpoint oil production of 31200 barrels per day, which will allow us to keep average full year production largely consistent with Q4 2020.

Levels.

Most importantly, we expect this plan to generate 55% to $75 million of free cash flow in 2021, assuming current strip, which will be utilized to further repay borrowings under our credit facility.

Finally, we expect oil as a percentage of total production to gradually increase through the year as a result of flush production from our development program. In addition to a higher capital allocation to our new Mexico assets for.

For the full year, we expect this figure to average approximately 52%.

In terms of production cadence.

Absent the recent weather events, we had anticipated a sequential decline in production from Q4 to Q1 due to timing of completions and pad development with subsequent quarter to quarter growth expected through the balance of the year.

Due to the recent weather events, we estimate that approximately 75% of our daily production.

Oil production was offline during the week of February 14th which will further impact that sequential decline for Q1.

Turning to unit costs at the midpoint LOE is estimated to be $4 80 per barrel, which is in line with Q4 2020 and reflects the structural improvements made throughout 2020.

Additionally, midpoint D. D day is estimated at $14 per barrel <unk> at $3 20, and cash G&A at $2 10.

As a reminder, our guidance includes preliminary estimates of the effects from last week's severe winter weather and we look forward to executing on the plan laid out today with that I'll turn the call over to Matt to review operations.

Thank you George.

Before I kick off today I'd like to follow <unk> lead and express my thanks, and gratitude to all the Centennial operations personnel in Texas, and New Mexico that.

That had been working countless hours to bring our production back online after the winter storm event.

We are very proud of our employees and contractors and in times like this are reminded that the product we produce is both essential and life saving.

I'll take a moment to provide a quick update on our current restoration production.

Like everyone else in the Permian Basin, our production and field operations were impacted by conditions created by the winter storm event.

As already mentioned like many producers in the Permian, We lost power in the field, resulting in significant downtime during the week of February 2014.

Power was restored over the weekend and since then our operations team has been working diligently to place the impacted wells back on production.

We expect to have essentially all of our wells back online by the end of this week.

And while we're still assessing real time developments.

We anticipate that the impacts to LOE and production will be relatively modest on an annual basis.

Lastly, the storm disruption caused minimal delays to our drilling and completions program.

Pivoting now to current operations on slide nine as.

As Youll recall in late Q3, 2020, we stood up one rig and in late Q4, we added a second rig to our program.

This is the first look at Centennial to point those operations and we are proud to report costs and efficiencies in line with our guidance provided last quarter.

A strong start after many months without significant operations in 2020 as a reminder, our operations team is now fully relocated to Midland and we believe we are poised to realize additional efficiencies and take advantage of the competitive local market of the Permian basin.

Year to date, we've completed two packages of wells in Reeves County.

The vintage four well pad was drilled targeting the third bone spring and the Wolfcamp Upper a these wells delivered an average IP 30 of over 1900 Boe per day.

235 Boe per thousand foot of lateral.

Additionally from this group of wells I feel it's worth pointing out that the vintage BT 13, H set an internal centennial drilling record and possibly a Reeves county record of spud to TD in just seven six days.

For an approximate and lately 9000 foot lateral or 19100 foot total depth well.

Another recently completed pad includes the iron Eagle Deep unit C 31, H and C 43, H wells.

Both wells were drilled targeting lower wolfcamp intervals and had a treatable lateral length of around 8000 feet.

While these wells are still in the initial stages of flow back.

We continued to deliver lower costs and higher efficiencies.

Combined these six wells were brought online at an average cost of approximately $790 per lateral foot slightly below the midpoint of our full year guidance of $7 50 to $8 50 per lateral foot.

Which I'll remind you is inclusive of facilities and flow back costs were quite pleased with these initial results and we will remain focused on driving further efficiencies throughout the remainder of the year.

Centennial's resumption of operations has been a positive story, so far from a cost perspective.

Now I'd like to point out a couple of things that we've been focusing on from a cost control perspective first we have locked in rig rates for the first half of 2021, thus fixing pricing at current contract levels. We.

We have also made sure that both rigs and our Frac fleet will be dual fuel capable, meaning we can toggle between <unk> and diesel as needed.

The dual fuel capability allows us to not only take advantage of lower prices of CMG, but also helps us to lower our corporate emissions.

Our facilities group has also been working on a new design that resulted in a 35% decrease in cost per well on the vintage pad.

This newer design utilizes less surface equipment and as such represents another structural improvement to our well level costs.

Lastly, we've procured two rigs with walking capabilities from A&P, and we anticipate those rigs to arrive shortly.

These walking rigs will replace our current rigs and will improve our move times substantially.

These efficiencies will drive cost savings that translate directly to the dollar per foot metrics at the well level.

As we have firmed up our drilling program for 2021, we felt it was necessary to provide some updated program statistics.

As you can see on slide seven.

Our 2021 drilling program looks a lot different from last few years and is focused on driving capital efficiency.

For the full year, we expect our two rig program to complete roughly 44 wells.

Or approximately 18% to 22 completions per rig this.

This represents a material increase compared to previous years it.

It should be noted that we are planning on doing this concurrent with increasing our average lateral length of our drilling program to 8800 feet.

Lastly for the first time since inception, our position in new Mexico will make up most of the activity for 2021 as approximately 70% of the completion schedule will be new Mexico wells.

Turning to slide 10.

You will see that our land group was successful in adding acreage throughout 2020 at a minimal cost our land team was able to increase our total acreage position by roughly 3500 acres.

Almost all of these incremental acres were added through Costless swaps and trades and we're primarily focused in new Mexico.

We increased our net acreage in new Mexico by 27% and that asset now makes up 29% of our total acreage position.

We did all of this while maintaining our low exposure to federal acreage, which still only makes up around 4% of our total company position.

As I said on the Q3 call and will reiterate again today, given our planned activity levels going forward are concern relative to additional regulatory risks on federal lands remains low and we believe we will be quite manageable.

More importantly, these potential risks will not impact the trajectory of our company.

Referring to slide 11.

Total proved reserves remained essentially flat in 2020 at around 300 million barrels of oil equivalent despite a 31% drop in SEC W. Ti price for the fiscal year of 2020.

This is primarily attributable to our improved capex and opex cost structure, which extended the reserves life of all wells and elevated the economics of our Puds.

Additionally, we organically replaced approximately 90% of our 2020 production at a drill bit F&D cost of around $13 50.

Before I turn it over to Sean I would like to touch on our ESG efforts on slide six you will see a high level summary of our operational achievements.

Supporting the ESG effort we.

We are very proud of our efforts on several fronts, namely our gas capture rate.

During the fourth quarter, we reduced our flaring right to 0.5% of our total produced gas.

This will remain a key focus for us as we have introduced our corporate target of 1% for 2021.

Additionally, we utilized 60% more recycled water in 2020 and have essentially eliminated the use of trucks to transport our produced water volumes as.

As I mentioned earlier, we are also running dual fuel capable rigs and frac fleets, both of which will positively impact corporate emissions.

We are excited to issue our first corporate sustainability report next month and look forward to continuing these efforts into the future and with that I'll turn it over to Sean for closing remarks.

Thanks, Matt.

As you've witnessed over the past several quarters Centennial has materially shifted its focus to free cash flow generation and debt reduction.

As a result of recent initiatives largely undertaken last year I also believe that centennial as a fundamentally stronger company going into 2021.

Through efficiencies and structural design changes, we have lowered well cost by roughly a third compared to year end 2019.

Our LOE related projects in the field, primarily our electric substation and associated infrastructure have materially reduced our LOE and we will continue to benefit us in the future.

Lastly, the shallow wing of our corporate decline rate has significantly reduced our go forward capital intensity. All of these attributes have helped drive and shape. Our long term game plan, which is highlighted on slide 15.

As George touched on earlier, we plan on operating a two rig program. In 2021. This plan will allow us to maintain full year average oil production largely consistent with fourth quarter 2020 levels. Our capital program. This year will also be highlighted by longer lateral development and overall higher higher capital efficiency, which we have oil.

Already started to realized in the first quarter of 2021.

As a result, we expect to generate 55% to $75 million of free cash flow, which will reduce our leverage by one five times.

Looking past this year and onto 2022.

We will continue to deliver on a sustainable free cash flow model utilizing a portion of our operating cash flow to pay down debt to further de lever organically.

This will be paired with a modest production growth profile as we will be targeting mid to high single digit oil growth long term, depending upon oil prices and global oil market stability.

Lastly, while we anticipate ending 2021 at less than two five times net debt to EBITDA at current strip prices. Our forward plan provides for a clear line of sight on less than two times net debt to EBITDA in 2022 with a further goal of less than one five times leverage in 2023.

And while the macro environment remains fragile pending the global recovery from COVID-19, we are cautiously optimistic that improving oil demand fundamentals are likely to support oil prices going forward.

It is important to note that our expectations of free cash flow generated both this year and in the future are not underwritten by $60 or even $55 oil prices.

Due to the dramatic changes to our cost structure. We believe we can be free cash flow positive in 2021 and beyond with oil prices in the mid $40 per barrel range.

Coupling that with our long dated maturity profile and ample liquidity centennial is very well positioned going forward.

In closing I believe the company is poised to generate shareholder value in 2021 and beyond we continue to have high quality assets in D. Premier U S oil basin and an operations team with a proven track record.

Most importantly, we have transitioned to a sustainable free cash flow generating company as a result of our expanded operating margins and lower well cost and plan to continue to organically reduce leverage over time.

We will also continue to look for opportunities to gain size and scale, but only if they are accretive to our financial metrics. Ultimately we believe the strategy discussed above will create long term value for our stakeholders. So thanks for this thing and with that we'll turn it over to Q&A.

Thank you.

Ladies and gentlemen, the question and answer session will be conducted electronically.

If you would like to ask a question. Please do so by pressing star one on your telephone keypad.

Questions on limit it to one question and one follow up question.

If you would like to withdraw your question press the pound key.

Again, Thats star one to ask a question. Please standby, while we compile the Q&A roster.

Our first question comes from the line of Jordan Levy with choice Securities. Your line is open.

Good morning, all.

Just wanted to touch on that 70 70 per cent of wells on the new Mexico side. This year, that's up pretty meaningfully from last year as you guys said.

First just wanted to get the thoughts on the key components driving that knowing the quality of the rock there, but also kind of being a smaller portion of your portfolio and then along those same lines you.

We saw a peer of yours announced plans to increase activity to accelerate federal acreage development.

Today, and knowing that federal acreage is a pretty small portion of your portfolio just 4% just wanted to get your thoughts around that.

That plays into the allocation strategy for the year.

Sure Jordan I appreciate the questions.

I think that.

New Mexico has always been a younger asset for Centennial we started out.

Building, our company from our Texas base, and so the investment in infrastructure and whatnot into Texas has always been higher in the past, allowing us to develop that asset a bit more aggressively as we have gained some maturity in new Mexico and continued to add to our position as Matt mentioned, we added some acreage last year into.

Mexico as well that position.

<unk> allowed us to further develop that we added some infrastructure last year and now that the maturity level is elevated in Mexico, It's just allowing us to pivot our activity level to that area and we're pleased with the results we've seen.

So thats. The main focus you mentioned federal acreage and some of our other peers talking about targeting federal acreage early in the year rather than later due to potential regulatory issues. That's not a key component for us as you mentioned, it's 4% of our portfolio is federal and so we're not going to be pivoting around that necessarily.

It's a very small component of what we do the main driver for it is that new Mexico is now a much more mature asset for us and the infrastructure in place to allow us to more fully develop it.

Great Great color. Thank you and then just as a quick follow up just wanted to kind of try and get a sense of cadence for the year, knowing that you know given the impacts of the winter weather <unk>.

The impact on that but just thinking about how we should think about things progressing throughout the rest of the year.

From a rig cadence perspective, I can tackle that we've talked about a two rig.

Two rig program throughout the year, we added that second rig in December of last year and plan on continuing that two rig program throughout this year. So the plan right now is no change in our adding of any rigs throughout the year. So you can think of it ish as an even cadence throughout the year, obviously as we.

Drill pads, which we do on almost every.

The rig and pad, it's multiple wells per pad that can change timing from one quarter to the next based on the timing of completions and whatnot, so but overall, it's a rather even cadence from a drilling and completion of our spud to completion perspective.

Great. Thanks, so much.

Thank you.

Our next question comes from the line of Dun Mcintosh with Johnson Rice. Your line is open.

Good morning, Sean.

Morning.

Just wanted to know just some color on your thoughts on hedging going forward in a traditionally as non had you know a lot of things have changed since then but now as you look at the strip for next year, you know above 55, how how do you all think about I imagine that that risk from the hedge book perspective.

Sure I'll talk about that a little bit and then maybe George might tack on as well as he kind of.

He's running our hedge book, but as you mentioned traditionally hedging has not been part of the Centennial strategy and for better for worse during different times of our of our life, but going forward. It will be part of our strategy. It's just it makes sense for US now that we've reached a certain tenure.

The life of the company to make sure that we are covering certain corporate costs as well as a capital program that continue that will continue to have sustainable free cash flow, we want to protect the shareholders. When it comes to that to generating free cash flow and deleveraging. The company. So that's the focus of that.

As we mentioned in the prepared remarks, the first half of 2021 is more heavily hedged than the back half we do see.

More risk on the first half of 2021, then we do the back half of 2021, and then going into 2022 that said as those quarters approach, we are likely to add some incremental hedges.

As time goes on if you've looked at forward looking prices Theres, a backwardation in the price forecast right now and that makes it a bit.

It prevents us from being too aggressive I think in getting too forward looking and had adding hedges to the back half of this year. So we're slowly legging our way into the back half of the year, but I think at very attractive prices as we see today George anything there you want to add to that yes.

Covered a lot of it Shaun I think for 2021.

Given the objectives I laid out in our prepared remarks, I think we've largely achieved the 2021 objectives in terms of protecting cash flow and the balance sheet to underwrite.

Baseline of operational activity.

As we look forward, we're mindful to maintain some upside exposure for our shareholders.

But there's a natural tension there between protecting your downside and delivering upside to your shareholders.

We're being a little patient as Sean pointed out in 'twenty, two given the backwardation, but youll see in the coming quarters that will start to chip away at that and certainly start to establish that predict protection for 2022. So that we can remain on a on a deleveraging path I think the silver lining of the backwardation in the curve is the fact that it would encourage.

As producer restrained from a capital standpoint, which in theory will support oil prices. So hopefully that's the case, but.

We're monitoring our hedge program on a daily basis frankly.

Expected to add some more protection for 'twenty two in the coming quarters.

Alright, great. Thanks, and then.

The next question you all gave some great color on some of the some of the things you've done in the field to continue to drive those efficiencies on the D&C costs, but.

Faster cycle times is a theme that we're kind of seeing amongst the smaller kind of one to two to three rig operators.

As we worked through earnings and I'm, just kind of trying to get a feel for it.

Is some of that.

Factor.

The result of getting rigs that you know six.

Six eight months ago, and some of the bigger players were run in two or three times, what they run it now.

Is there a better product on the market. That's now more cost attainable for you all and how much of that is driving what you've been able to do and you know dropping.

Drop in D&C cost back.

Over 20% so far since the first half of 'twenty.

Yeah I'll go ahead and feel that this is Matt.

I don't think that it's necessarily the result of us getting field hands that came from.

The big the big companies like the Exxon and the shelves and the folks that lay down debt down rigs I mean, what I think it is a cultural shift in our field we've.

We had to rebuild a lot of our drilling department as a function of the.

The reduction enforced that we went through last year.

So our guys got to kind of build a new culture around.

A different set of folks and so we everybody from the field superintendents down to the hands on the rigs.

Have all kind of gone through.

What we're calling.

Calling our Centennial 2.0, cultural indoctrination right. So a lot of a lot of it is just a training people to look at all the different things.

With regard to flat time, focusing on where youre, where youre standing and where the people need to be on the location for trips and connection speeds and we're focusing on every little aspect of our business.

And really the industry has experienced a very significant downturn and a lot of the experienced people.

In the field.

A lot of them that are still there and they're on are there on our crews and other crews, but a lot of folks have gone on to other things too and I think that's there's a lot of green hands that are coming in and were just training them too and so it's it's not necessarily the way you had described it where we're just reaping the benefits of <unk>.

Somebody else's training, we are training folks and starting starting our culture from square one.

Okay, great. Thanks, Yeah, I mean, it sounds like it and.

Glad to see the progress you are making and look.

I look forward to seeing what else you can do over the course of this year. Thank you all right. Thanks for the question.

Thank you.

I'm showing no further questions I will now turn the call back over to Sean for closing remarks.

Thank you yeah. So in closing as you can tell from our presentation and from the prepared remarks, we're very excited about the future of the company.

Now that we've pivoted to a sustainable free cash flow entity. We think we can materially continue to delever the company over the coming quarters and beyond and so with that said you know I look forward to answering additional questions with upcoming conferences. We do plan on attending even these virtual conferences over the next few months and I look forward to following up on <unk>.

<unk> is there, but I think the future is bright for Centennial and I think 2021 is going to be very good year for both the company and the stakeholders and look forward to continuing the conversation with all of you investors and those folks who have listened in on the call today, so with that.

And again, we'll talk to you all soon.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Yes.

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