Q4 2020 SilverBow Resources Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Silver Bowl resources fourth quarter 'twenty 'twenty earnings Conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will meet the press star one on your telephone please.
Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero, our star one now I'd like to hand, the conference over to Mr. Jeff Magnus Director of Finance Investor Relations. Please go ahead Sir.
Thank you Angel and good morning, everyone. Thank you very much for joining us for our fourth quarter and full year 2020 conference call with me on the call today are Sean Woolverton, our CEO, Steve Adam our CFO and Chris <unk>.
Our CFO.
Yesterday afternoon, we posted a new corporate presentation to our website and will occasionally refer to it during this call we encourage listeners to download the latest materials.
Please note that we may make references to certain non-GAAP financial measures, which are reconciled to the closest GAAP measure in the earnings press release.
Our discussion today may include forward looking statements, which are subject to risks and uncertainties many of which are beyond our control. These risks and uncertainties are described more fully in our documents on file with the SEC, which are also available on our website.
That I will turn the call over to Sean.
Thank you, Jeff and thank you everyone for joining our call. This morning.
On behalf of silver Bow I hope, everyone, who may have been affected by the weather related events across the south for doing well.
It has certainly been a challenging last few weeks.
To start I will review, our impressive fourth quarter and full year results.
I will then provide a brief overview of our 2021 business plan.
This past year showcase silver Bose commitment towards a returns based strategy.
We entered 2020 with the target of growing oil volumes by 70% and generating free cash flow in the second half of the year.
By March the global pandemic and commodity price environment necessitated a different approach to maximize stakeholder value.
In response, we took immediate actions to revise our original 2020 program.
Specifically in the second quarter, we refocused our drilling schedule and temporarily halted our D&C spend.
We curtailed production and deferred completion activity.
Theyre, thereby aligning our volumes with higher prices later in the year.
By.
Rising changes to our production profile over the next 24 months, we brought for $38 million in cash by monetizing excess oil derivative derivatives in March.
Finally, the amidst this disruption we also closed on two A&D transactions in the second quarter.
By year end, we have reduced our capital budget by nearly $100 million and paid down $50 million of debt.
Silver bow generated more than $60 million of free cash flow over 2020 ahead of the $50 million guidance, we stated on our last call.
Fourth quarter free cash flow of $12 million Mark five out of the last six quarters in which we were free cash flow positive.
The impressive results, we are a testament to the hard work and dedication of our team who executed on our mission, even with disruptions to the daily lives.
Our operations team renegotiated rates with our service providers and reviewed our cost from top to bottom to find incremental savings.
Our corporate office implemented a work from home schedule to protect our employees and found new ways to streamline activities and increase our efficiencies going forward.
Thus far we have identified $2 2 million of cash G&A cost savings for 2021.
We also.
<unk> reached the critical milestone and operational safety with zero total recordable incidents for the year.
This is remarkable considering the pace of change within our operations.
We are proud to set new standards for safety and efficiency here at Silver Bowl.
In addition, silver barrel was recognized as one of the top workplaces by the Houston Chronicle.
On top of our safety achievements silver both continued to set new operational efficiency records.
This past year, we drilled more lateral feet and completed more stages per day.
Thereby reducing our capital cost per foot per stage and per well.
In face of all the headwinds in 2020 silver both delivered record free cash flow.
Absolute debt reduction and positioned itself to benefit from an improving committed the commodity price outlook.
For the fourth quarter of 2020, net production averaged 178 million cubic feet of natural gas equivalent per day above the midpoint of our guidance.
Our 2020 Capex of $95 million was at the low end of our guidance and coupled with favorable pricing and production performance, we generated $12 million of free cash and paid down $23 million of absolute debt during the fourth quarter.
At year end, the PV 10 value of our proved reserves at $50 oil and $2 75 gas was approximately $850 million.
Which equates to a $35 share price after backing out of our debt.
As we look ahead, we plan to hold our full year 2021 capital spend at similar levels for 2020.
Our capital budget range of 100 to 110 million deliver single digit production growth and continued debt paydown.
Signature of silver barrel, we have the flexibility to adjust the cadence and hydrocarbon mix of our drill schedule and to maintain multiple playbooks to optimize real time.
With the strengthening gas prices, we are poised to generate another year of meaningful free cash flow and debt reduction.
At current strip, we expect full year of 2021 free cash flow to be in the range of $20 million to $40 million.
Our gas hedge position over the next two years utilizes a heavier mix of callers preserving our upside to improving gas price fundamentals.
Given the constructive fundamentals for gas approximately 40% of our 2021 gas volumes are unhedged.
Included in our development plan. This year is an Austin chalk well, which is currently on flow back.
We are encouraged by the early results from this test and see the potential for offset locations over our acreage position in Webb County.
Any inventory additions at incremental value to both our future reserves and our borrowing base.
Our ground game leasing strategy is focused on accretive A&D opportunities to add locations and extend lateral lengths.
Finally, we remain disciplined on larger scale M&A.
We believe that the recent move up in commodity prices have both buyers and sellers closer to the table.
Before turning the call over I will add that our 2021 budget is not focused on just for one year.
We are taking the necessary steps to grow production and EBITDA expand inventory drive capital efficiencies and de lever the balance sheet.
Our organizational culture is focused on empowering our team to drive incremental value in everything they do on a daily basis.
We have demonstrated a track record of meeting or exceeding our objectives and we look forward to continue to deliver on our corporate strategy in the years ahead.
And with that I'll hand, the call over to Steve.
Thank you John moving on to our operational results.
This year amidst all of the disruptions of 2020, our team set new high watermarks in both safety and efficiency for us.
I would like to congratulate the team for a recordable incident rate of zero in 2020, which is not just the milestone, but it's now a go forward the standard.
At the same time, our team also continued to drive operational efficiencies and recognized cost savings.
As shown on slides 19, and 20 of our presentation, we drilled 44% more feet per day and reduced our drilling cost by 32% per foot compared to 2019.
On the completion side, we completed 8% more stages per day, and reduce completion cost per well by 13%.
In the fourth quarter, we drilled and completed three fast and wells and began drilling our second six volume as the path.
The fast competitive day record setting 18 stages per day and was brought online in December $3 million under budget.
With regards to our second La Mesa pad, we benefited significantly from the process improvement and cost efficiencies, we learned from our first lamesa pad.
Are you seeing drilling cycle times by 28%.
In short our team continues to demonstrate its track record of operational execution.
As Sean mentioned during the second quarter of 2020, we made strategic decisions to curtail volumes of deferred completions.
All of curtailed wells were back online in the fourth quarter and we're producing as expected.
On a full year basis, we estimate the curtailment program amounted to $11 Mcf per day of net gas production and 340 barrels per day of net oil production, which is approximately 8% of both our oil and gas production for 2020.
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For the full year of 2020, we drilled 19 net wells and completed 15 net wells.
Our drilling focus shifted from oil development in the early part of the year the gas development in the second half of the year.
Looking forward to 2021, we plan to drill 50, net wells and COVID-19 net wells are near term for focus over the first half of the year will be on our web county gas asset.
Over the summer we plan to allocate the we plan to allocate capital the liquids weighted opportunities in our Lasalle condensate area later in the year, we plan to ship capital back through our Webb County gas area.
As Sean noted are.
Of our full year of capital budget range is $100 million to $110 million, which we expect to deliver single digit production growth positive free cash flow and further debt reduction.
From an investment standpoint, we expect our capital incurred to be higher in the first quarter as we complete our remaining will make the wells and bring on the Austin chalk tests.
Having the flexibility to optimize our development program and capture the highest returns throughout the year remains core to our strategy.
For the first quarter of 2021, we are guiding to average production of 168 to 179 <unk> per day with gas comprising approximately 78% of production at the midpoint.
For the full year average production guidance is 180 to 200 Mcf per day with gas comprising approximately 79% of production up from 76% in 2020.
At the midpoint of our full year of production guidance targets, a 5% increase in production year over year.
Note that our first quarter gas production has only a few weeks of contribution from our recent la Mesa path.
Furthermore, we anticipate our oil production to pick back up in the third quarter as our Lasalle wells are brought online.
We rejected ethane in January we switch the full recovery in February and March and will continue to use our optionality to make monthly elections for the remainder of the year to optimize value.
On the cost of front, we have several expense projects related to maintenance and production optimization of a portion of our production base, which will result in slightly higher LOE per unit in the first quarter.
For a breakdown of our 2021 guidance. Please review of our latest press release and our corporate presentation on our website.
As we progress through the year. Our goal is to continue to improve upon our efficiencies, while maintaining safe and environmentally responsible operations at.
As shown on slide six and our corporate presentation Silver Bowl ranks amongst the lowest equivalent emission intensity operators in the Eagle Ford both public and private.
Our incident free record our Skus me our incident free safety record now stands at over 1000 days and counting.
Working to ensure the safety of our employees contractors and service personnel is of Paramount importance the.
This along with a balanced mix of our inventory and the flexibility of our development program. We are integral to our success in 2020, and we will continue to be at the core of our strategy moving forward with that I will turn the call over to Chris.
Thanks, Steve in my comments. This morning, I will highlight our fourth quarter and full year financial results as well as our operating costs hedging program and capital structure.
Fourth quarter oil and gas sales were $53 million, excluding derivatives with natural gas, representing 73% of production and 60% of sales.
During the quarter, our realized oil price was 91% of Nymex WTO, our realized gas price was 101% of Nymex Henry hub and our realized NGL price was 37% of Nymex WTS.
Due to higher commodity prices, our realized price excluding hedges.
It was $3 and $21 seven per.
For Mcf.
An increase from $2 72 per Mcf in the third quarter of 2020, and $3 24 per Mcf in the fourth quarter of 2019.
Our cash gain on settled hedge contracts was $1 million for the fourth quarter and $78 million for the full year inclusive of the monetize derivative contracts.
As of February 26, Silver Bell had 63% of total estimated production volumes hedged for the full year 2021, using the midpoint of production guidance. Our expected oil production is 91% hedged with the weighted average price of $46 91 per barrel of oil.
Our expected gas production of 61% hedged with the weighted average price of $2 $92 90 per M and Btu.
Our expected NGL production is 46% hedged with the weighted average price of $23 94 per barrel of NGL.
Our hedges are a combination of swaps and collars with a weighted average price of factoring in the ceiling price for the callers for us.
The management is a key aspect of our business and we are proactive in adding oil and gas basis in calendar month average roll swaps to further supplement our hedging strategy.
We continue to use basis swaps to manage our exposure of the differentials for 2021, we have gas basis hedges on 110.
The CF per day with a weighted average differential of negative <unk>.
Silver both hedges also provided relief from full year 2020 benchmark prices.
<unk> the impact of hedges, we realized an average gas price of $2 <unk> per Mcf and average oil price of $37 89 per barrel and the total equivalent price of $2 66 per Mcf.
Including the hedge impact of cash settled derivatives. Our average realized prices were $2 44 per mcf for gas $51 16 per barrel for oil and $3 25 per Mcf the on a total of equivalency basis.
The combination of silver both hedges and production timing of resulted in a 38% uplift in our realized gas price and a $13 uplift in our realized oil price for the full year. This does not include the impact of our hedge of monetization of $38 million received during the first quarter of 2020.
While we are encouraged by the relative improvement in benchmark pricing during the fourth quarter and early in 2021, we plan to remain conservative in our capital investment and judicious and locking in favorable return as shown on slide 16 of the corporate presentation.
We consistently realize prices close to Nymex benchmarks and maintained favorable basis premiums.
This is a key competitive advantage of our Gulf coast asset base.
Turning to costs and expenses.
With <unk> 33 per Mcf for the fourth quarter.
Transportation and processing costs for 'twenty seven per Mcf for the fourth quarter, while production taxes were five 6% of sales.
For 18 per Mcf.
All of these cost compared favorably to our guidance ranges.
Adding our LOE.
E&P and production taxes together.
We achieved total production expenses of <unk> 78 per Mcf.
Continuing our trend of the total production expenses of less than one dollar per NCIC, and which we believe stands out amongst our gas producing peers.
Cash G&A of $3 6 million for the fourth quarter, which excludes stock based compensation was below the midpoint of guidance of $4 3 million.
And more than a 20% reduction compared to the prior quarter and prior year periods.
Total cash operating expenses, including total production expenses and cash G&A totaled $1 per mcf for the quarter.
For for full year 2021, we are guiding for cash G&A of 16 five.
$5 million at the midpoint, a 12% decrease from full year 2020.
We consider our lean cost structure to be a competitive advantage, which allows us to sustain profitability during periods of volatile commodity prices as we move through 2021, we intend to identify further savings.
Adjusted EBITDA for the fourth quarter was $38 million.
Adjusted EBITDA for purposes of calculating our leverage ratio was $48 million.
Which includes amortized derivative add backs of approximately $9 million.
In conjunction with unwinding of oil derivative contracts related to production periods in 2020 and 2021.
Silver bow is able to amortize.
The $38 million they receive in March of 2020 as add back gains in discrete amounts extending from April 2020 through December of 2021.
The amortized hedge gains factor in the silver both adjusted EBITDA calculation for covenant purposes over the same time period, and therefore important for investors and the research analysts to understand when tracking our leverage ratio.
On a last 12 months.
Or full year 2020 basis, the add back was approximately $25 million.
And our LTM adjusted EBITDA for leverage ratio was $171 million.
Our year end leverage ratio was two five times in 2021, we will receive an add back benefit of approximately $14 million for purposes of calculating our leverage ratio.
With the continued focus on our balance sheet and free cash flow generation, we're targeting closer to two times leverage exiting 2021.
As reconciled in our earnings materials.
We generated $12 million of free cash flow.
As Sean noted earlier this marks five out of the last six quarters of positive free cash flow.
For the full year silver bow generated $61 million of free cash flow more than $10 million above guidance.
Our net working capital deficit at year end was $18 million.
And the $11 million cash inflow quarter over quarter.
Please note that changes in working capital are excluded from our free cash flow calculation.
We continue to manage our cash needs from our receipts and disbursements standpoint, as we optimize the balance between development activity timing and our liquidity.
Capex on an accrual basis totaled $20 million for the quarter and $95 million for the full year, representing a 64% reduction in full year capex year over year.
Nearly all of our capital investment in the fourth quarter was associated with our web county dry gas drilling.
Our 2021 guidance, which the detailed in his comments target's capital spend at similar levels to 2020 with the modest production growth spurred on by the gas wells that have recently come online.
On our current plan, our 2021 reinvestment rate is between 70% and 80%.
Our fourth quarter cash interest expense of $7 million was down approximately 20% from a year ago and our full year cash interest expense was down 17% compared to full year 2019.
These reductions were due to lower borrowings.
Effective cash and LIBOR tranche of management and favorable interest rates.
In 2021, we expect our overhead the continued to decline as we prioritize debt paydown and realize further G&A savings.
Turning to our balance sheet, we further reduce our total debt by $23 million during the quarter.
Totaling approximately $50 million of reductions under our revolving credit facility compared to the end of 2020.
As of December 31, we had $230 million outstanding under the under our credit facility approximately $2 million of cash on hand, and $82 million of liquidity.
As it relates to our credit facility that had been positive discussions in active dialogue with our lenders to extend the maturity date of our credit facility in conjunction with our semiannual redetermination.
I would like to thank JP Morgan and our full banks indicate for the continued support we plan to provide additional details on our first quarter conference call.
At year end, we were in full compliance with our financial covenants and had sufficient headroom to execute our strategy.
And with that I'll turn it over to Sean to wrap up of our prepared remarks.
Thanks, Chris.
To summarize silver barrel is set up for growth with similar Capex for 2020, which leads to free cash flow and debt reduction in 'twenty one.
We expect silver barrel to continue to outperform other small cap peers.
Our winning strategy is focused on a balanced portfolio efficient operations debt reduction and our low cost structure.
We hold the constructive outlook of domestic supply and demand dynamics that support higher gas prices.
Encouraging results from our Austin chalk tests.
As well as higher oil prices.
Expand our drilling inventory.
As well as our strategic playbook over the next several years.
Thank you for joining our call this morning, and allowing us to share our results in.
In the face of uncertainty we are focused on factors within our control.
By concentrating on capital discipline, and strengthening our balance sheet and cash on cash returns silver bow is positioned for greater stakeholder returns.
We look forward to providing further updates on our next call and with that I will turn the call back to the operator for questions.
And ladies and gentlemen at this time as a reminder, if you would like to ask an audio question. Please press star one.
And our first question comes from the line of Dun Mcintosh.
Jr. CEO. Please go ahead.
Good morning, Sean.
Hi.
Just wanted to kind of start big picture.
Congrats on getting the debt down from 2020 of them.
Particularly challenging year, but.
One of the some of things that gives you confidence debt.
And the repeatability of that program for 2021, and Thats, the kind of think of little longer term for silver barrel mid single digit growth paying down debt is that kind of what we should expect to see from you all going forward.
Hey, guys are kind of start there.
Yes, Yes, I think you characterized our long term strategy spot on our plan as the deliver modest growth probably in the 5% to 10% range Thats, both on production and EBITDA.
While spending within.
Probably 70% to 80% of our cash flow.
And then using proceeds from the remaining cash flow to pay down debt as we think thats the best way to return value to the shareholders.
Okay, great. Thanks.
And then I guess, if you could provide a little more color on the Austin chalk gesture what kind of runway do you think you could have there what do you see in early days, but the gives you the.
Kind of encouraging so far.
Yes.
The extremely excited about the <unk>.
Adding the stacked pay potential of the Austin chalk into our inventory and expanding our inventories specifically in the dry gas window at the <unk>.
Net county.
We're starting to see more and more operators come out in the Western Eagle Ford Austin Chalk success, both the EOG and the SM energy has had successful delineation programs and are now shifting to development of Silver Bowl is the.
Fast on that same path. So we drilled our first delineation well capital came in as expected at nationally below of what other operators are signaling their target. The costs are so we think we continue to lead as the low cost operator in the basin and we will do that on the Austin chalk.
The results. Thus far we are in very early days of the flow back, but we're already exceeding our IP.
Expectation on the well.
And so we think that the first test is the success and plan to drill additional delineation wells across our position in Webb County, and we think conservatively would add probably another 50 to 75 locations that will be high rates of return.
<unk> in the future years at strip pricing.
Alright, Thats, great and then I guess just for one last one.
The ticket kind of give some color on what you're seeing in the M&A plan.
The landscape.
Of our small cap peers, we're successful in getting deals done in the fourth quarter and at the beginning of the year and I guess, a little bit on that but then if you could kind of put it in context with your current inventory of how comfortable you feel better.
That'd be great.
Yes, no I appreciate that.
I think we continue to focus on.
<unk> asset base.
I do believe that our platform.
One of the low cost operators and one of the few publicly traded companies that the solely focuses on the Eagle Ford.
As a.
Companies that can participate in the consolidation of the Eagle Ford.
For the privates that are looking for exits out of the basin as well as publix.
Firm believers in the gaining more scale is critical to driving down our cost of generating returns.
The returns for our stakeholders. So that's our strategy I do think that the as I noted in my comments that the.
More stability in commodity prices is bringing folks closer together on <unk>. So we.
We need to be active in the market and continue to talk with a lot of people across the Eagle Ford and will.
At the right time at the right valuations of deals if it makes sense to silver book.
Alright, thank you.
Thank you.
And ladies and gentlemen at the reminder, if you'd like to ask a question. Please press star one. Our next question comes from the line of Neal Dingmann with true Lynch. Please go ahead.
Good morning, all.
For detailed sparse Shawn Shawn just a quick one what Don was saying that.
With the.
Net net a little of bolt ons with M&A remind me what's your prospects for a lot of your web and in the other bigger areas, what youre kind of NRI of your working interest and these are opportunities to continue to add.
The more interest on some of that is that possible for in the late of what what are the dollar.
Could you just can't get a lot of the handful of builds the habit.
Yes to be.
Honest with you.
Across just about all of our position.
Hold 100% working interest so not much in terms of non operated the physicians to require kind of to acquire the one area of the one asset.
We have.
Slightly below a 100% working interest is on a fast and property.
Where we're partners with the Saka.
The date continues to be I think.
Barry.
Please with the.
The asset and have given the interest of selling at this point in time, So would love to acquire more non op position I think it's the most efficiently to do acquisitions, but.
At this point.
We control.
About 100% of everything that we own.
Okay, and then I think you had mentioned in the press release you are moving.
We're talking less debt, you've talked a little bit about potential some some of them.
Our past inflation I'm just wondering.
One maybe just talk about that a little bit more of what are you expecting for the rest of the year versus maybe what you see right now and then.
The rigs and Frac I know one.
A couple of the Permian blogs of Permian guys.
That's the base still kind of call that goldilocks.
The <unk>.
Prices in.
In placing the scope staying pretty low but the availability is still very high. So I'm just kind of curious if you wanted to.
Sort of move that a little bit or do you have milwaukee and on some longer rigs the.
Populations, so both on the cost of debt availability.
Yes.
And it's.
Probably everyone's different we were one of the early movers in terms of.
Completing our DUC.
Started completing our DUC the back in July and then brought our drilling rig non met in October so the reference point Aldo from US maybe at the lower the market.
Where others waited until later in the fourth quarter and early this year.
Pick their activity backed up so what we're seeing relative to where we were at in the fourth quarter is probably increases in the 5% to 10% range.
Relative.
Again to what we did mid year of 2020 in fourth quarter of 2020, and we're just seeing activity starting to pick up.
Across the space.
The expected inflation there is just a reality.
Got it got it and then could you talk a little bit on you mentioned a little on edge gene I'm just wondering.
Looking quite a ways forward.
Once you have it does appear like the free cash flow as continued net orders. So we do definitely think we'll be down around two times for even better by the end of the year I'm just wondering if that's the case.
Your with your hedging sort of policy still to certainly the banks aren't going to be pushing the deals I'm just wondering sort.
We've taken about maybe how you're thinking of that sort of hedges next year. If you are a bit better.
Leverage position would you still have the same type of plan or would you think about it differently.
Yes.
Kind of the basis of our hedging strategy is to look at the returns of our drilling capital.
In may.
The make our allocation decisions based upon pricing that we think we can lock in over the the first couple of years. So we always look in advance of our capital program the from.
To lock in the.
For the first 24 months.
The 50% usually achieves that.
And so I don't think that strategy is going to change for us, we're always going to look to lock in our returns.
And hedge the appropriate volumes over the first 24 months.
Okay.
One more and just wondering.
Web kind of continue the big Big Big area for you. All can you give sort of your expectations. How you see it today just on returns when I looked at maybe web versus Lasalle and I don't know if its too early debt.
Or have any expectations on the chart.
By my Math says the May I think even where gas is now even though we've had a bit of a run up in the oil in the 275 I think your returns are still quite strong with web. So I guess, that's what I'm getting at is just the teeth.
Could give us maybe just some broad color on how youre thinking on returns currently or go forward.
The script for for web of Lasalle.
Yes.
<unk> debt.
The makeup of the commodity in web is essentially 100% dry gas and at the 275 returns there are north of 40% and even higher.
That's a bit the benchmark return for web county at $2 75.
All of the commodity mix is really a third.
Third a third of third and we're seeing strong commodity prices on all all phases include.
Including the strong move of of NGL. So.
That's why we're planning to allocate our summer drilling season capital to our Lasalle project and.
And net the returns there are north of probably 60% at the current commodity prices.
But again, thanks, so much of the details yet appreciate the questions and you'll have a good day.
And our next question comes from the line of Jeff Robertson with watercolor restart the flag.
Thanks for question on the <unk>.
Austin chalk.
Are there opportunities to leverage your existing service surface infrastructure either.
Gas processing or just the killing locations to enhance the returns if you move toward.
The development program in the chalk.
Yes, yes.
I appreciate the question, Jeff and definitely one of the reasons, we're excited about what it is.
It's all stacked on top of our existing Eagle Ford development, So we're going to be able to leverage both our existing pads as well as the infrastructure of the gathering lines of the compressor stations that we have in place so that enhances the returns there for sure.
Are there any gather.
Gathering are there any constraints in gathering and processing.
Dry gas flow theres minimal processing, but are the gathering constraints in that area of would you just manage.
How you would develop the chalk versus value of developed.
Yeah.
Yes.
Yes, yes.
No at this point in time and something we've always said about why we like South Texas, there is plenty of infrastructure and takeaway points.
So.
With even increase the development by us and other operators of the Austin Chalk, we think there is sufficient capacity to takeaway.
The growth in production that we could see from the play.
And then lastly.
Can you talk about any additional wells that will be end of 'twenty 'twenty, one capital program to target the chalk.
Yes.
I think.
What I mentioned is our Capex, we're very pleased with the.
You think about developing the new target for the first thing you want to understand is the how.
Are you.
Expectations on capital correct, we were very pleased with our performance on our first well.
So we kind of check the box there. The next day is getting the IP and I think I mentioned above our IP target. So now.
To understand from the initial decline, we're probably going to give at least the four to six months of decline.
See if we see similar declines which in other operators Austin chalk wells have been flatter than the Eagle Ford.
And so as long as we exhibit that we'll probably look to be backed out drilling another Austin chalk in the second half of the year.
And we'll take the delineation type of approach.
Across our Rio Bravo, Baskin, La Mesa and acreage that we acquired last year that fits in the north the east part of web.
Great. Thank you very much for us.
The questions have a good day.
And now I would like to turn the conference back over to Sean Woolverton for any closing remarks.
Again I appreciate everyones interest in Silver Bowl hope, everyone is doing well and look for two of giving you an update.
When we speak again sharing our first quarter results.
Ladies and gentlemen, thank you for your participation. This does conclude today's conference call you may now disconnect.
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Henry.
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The next day.
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