Q1 2021 Ovintiv Inc Earnings Call
Good day, ladies and gentlemen, and thank you for standing by welcome children to F. 2021 first quarter results conference call. As a reminder, today's call is being recorded.
At this time of all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session.
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I would now like to turn the conference over to Steve Campbell from Investor Relations. Please go ahead Mr. Campbell.
Thank you operator, and good morning, everyone welcome to our first quarter 2021 conference call.
This call is being webcast and the slides will used today are available on our website at <unk> Dot com.
Please take note of the advisory regarding forward looking statements at the end of our slides and in our disclosure documents filed on SEDAR and Edgar.
Following our prepared remarks today, we will be available to take your specific questions and.
As always limit your time to one question and one follow up as this allows us to get to more of your questions on a timely fashion.
I'll now turn the call over to our CEO, Doug Suttles. Thanks, Steve.
Good morning, everyone and thank you for joining us we're eager to share our results today on another strong quarter.
Following our prepared remarks with as Steve said, we will be available to take your questions.
As outlined in our pre released a few weeks ago and again and today's results are our business continues to perform exceptionally well we are rapidly paying down debt. We finished the quarter with less debt generated significant free cash flow and exceeded our divestiture target with the announced sale of our Eagle Ford and Duvernay asset.
Our duvernay asset close yesterday, and our Eagle Ford sale is on track to close later this quarter, we weathered winter storm Yuri with minimal impacts from the quarter and no impact to our full year forecast, we are highly confident and our ability to deliver the plan we've laid out for 2021.
Our 2021 outlook remains consistent with our investment framework and reiterate our key priorities of debt reduction maximizing efficiencies and maintaining the scale of our business.
What a difference a year makes this time last year and the face of the pandemic related destruction of global oil demand, we were making real time decisions to reduce capital spending shutting in production and quickly and implementing new safety measures to protect the health of our people.
Despite the uncertainty we were very confident we can not only manage the challenge, but emerge stronger and more efficient and positioning the company to thrive as the ban for our products return.
We were prepared for volatility and our business had tremendous flexibility that aided our decision making.
The proactive steps, we took a year ago have positioned us very well today and it is coming through and our results.
And the first quarter, we delivered net earnings of $309 million generated total cash flow of $890 million and free cash flow of $540 million. These numbers are inclusive of the $156 million cash tax recovery that we received during the quarter.
We expect 2021 to be our fourth consecutive year of free cash flow generation.
Our capital investments came in lower than forecast at $350 million as our teams continued to do a great job of offsetting limited inflationary pressures with new efficiencies and innovation.
Our culture of innovation makes a difference in every part of our business, but it is clearly evident and our operating performance.
Our full year capital program of $1 $5 billion screens as one of the best capital efficiencies and the E&P sector. Today, we've made incredible progress on driving costs out of the business and our culture of innovation is what drives and sustain this on.
For a multi basin portfolio of provided stability to our production profile in the quarter like others. We were forced to temporarily shut in volumes earlier, this year, and Texas, and Oklahoma and response to winter storm, Yuri but strong performance from the Montney and other base areas allowed us to maintain crude and condensate volumes of 198.
And barrels a day in line with our original Phil for your target of 200000 barrels per day, and fact on a full year basis, we expect of fully offset the effects of winter storm Yuri.
Debt reduction remains our number one part of our priority and we've made tremendous progress towards our total debt target of $4 $5 billion during the quarter, we reduced our debt by $467 million and ended the quarter with liquidity of $3 $8 billion.
And we've now dropped our debt by nearly $1 billion since mid year 2020, the last three quarters and.
As I mentioned, we have exceeded our $1 billion divested your target yesterday, we closed the sale of our Duvernay asset and we expect the Eagle Ford to close later this quarter. These proceeds will go directly to debt repayment.
Based on a 50 dollar W. T I oil price and of $2 75, a set nymex gas price, which looks conservative compared to today's strip, we expect our total debt to be less than $5 billion by year end and expect to reach our for $5 billion debt target and the first half of next year.
We expect to generate free cash flow of about $1 $5 billion in 2021, if we use pricing consistent with today's strip for the remainder of the year.
Our longer term frame framework remains intact with a low leverage target of one five times net debt to adjusted EBITDA or lower and of.
A reinvestment rate of less than 75%.
Factoring in the impact of asset sales, we expect our full year of crude and condensate production to average approximately 990000 barrels per day, we had no capital allocated to either of the Duvernay area of the Eagle Ford. This year. So our planned capital investments for 2021 remain unchanged at approximately $1 5 billion.
Strong environmental performance and continuous improvement was demonstrated again this quarter with our venting and flaring and volumes coming in below point for percent of gas sales I'll now turn the call over to Corey.
Thanks, Doug and as Doug mentioned, we're positioned to generate about $1 5 billion and free cash flow and 2021 at current prices. This will allow us to reduce debt improve the leverage ratios and repay our upcoming bond maturities with cash on hand.
When you combine the proceeds for asset sales and the free cash flow, we expect to generate we should have enough cash to pay both of our upcoming debt maturities.
The first of which is part of callable starting in August and repay a significant amount of any short term and commercial paper for our revolver balance.
We are very pleased with the acceleration of our debt repayment strategy. We know this is the best thing we can do for our shareholders and this has been reflected and the performance of our equity year to date.
Our 2021 outlook equates to reinvestment rate of about 60% of cash flow at $50 of WTO oil and $2 75, Nymex natural gas and at current strip pricing. The reinvestment rate is just about 50% of.
For the longer term, we will continue the steward our business to a leverage ratio of one five times net debt to EBITDA or less at mid cycle prices. We think this level of leverage is appropriate for an E&P company and consistent with an investment grade credit rating the Cree.
Rating agencies have taken notice of the strong outlook for our business and the acceleration of our debt reduction efforts and.
As such we have recently received positive credit rating and outlook changes from all of the rating agencies and as a reminder, our strong financial performance is further bolstered by our declining legacy cost profile, we've again outlined and the cost trajectory and the appendix where on a cumulative basis, you will see approximately $1 8 billion.
And of legacy cost reductions from 2021 to 2025, when compared with our 2020 run rate. There is no risk associated with these cost reductions they simply roll off over time, improving our cash flows.
I will now turn the call over to Gregg Givens.
Thanks Corey.
We continue to deliver industry, leading well cost reductions and our core three assets the recovery and the global economy has led to increased demand for fuel as well as other raw materials and as a result, we did see modest cost inflation during the quarter on commodities like diesel and steel.
Our centralized supply chain management team anticipated these cost increases their efforts and procurement and contracting along with operational efficiencies and the field allowed us to fully mitigate the impact of cost inflation during the quarter.
Year to date, well costs and the core three assets were either in line with or below our full year targets.
These costs of roughly 12% lower compared to 2020.
Despite continued pressure on select items, we fully expect to meet or beat our capital guidance of $1 5 billion for the year.
We entered the year with significant significant operational momentum across all of our assets. During the first quarter. Our teams continued to deliver pace setting spud to rig release times and record lateral lengths.
And the Permian drilling efficiency gains and Simon Frack completions continued to drive our strong performance and the play.
This included a new drilling pacesetter with less than seven day spud to rig release time.
And the Anadarko, we had another record of cost performance.
And the stack D&C cost average $4 40, sorry, excuse me $440 per foot about 4% lower than our full year of 2021 guidance and 8% lower than our 2020 average.
And the team also achieved a record operational quarter with a nine day average spud to rig release time and of $6 two day pacesetter well.
And the Scoop, we brought on five Springer wells and the quarter with average D&C cost of $5 2 million per well with oil performance exceeding type curve expectations.
Moving north of the Montney, our D&C cost averaged $380 per foot or 16% below the 2020 program average.
Approximately 80% of our Montney wells were completed using some of Frac technology. We've been very pleased with the application of this technology and the play and the consistency of the well results.
The graphs on this slide are of good representation of the level of drilling efficiency that we are achieving today across the portfolio today.
Today, we are not only developing our acreage with longer laterals, but we are doing so and a significantly shorter amount of time.
We were very excited to see the startup of the Howard County, wet sand facility during the quarter.
With this mind, our world class supply chain management and operations teams have secured of low cost and low risk source of sand and the Permian without using our capital.
We have exclusive rights to the mine, which is expected to supply sand to about two thirds of our Permian operations. This will reduce our exposure to inflationary pressures and lower our completion costs.
We are expecting to source sand and around one six cents per pound from the new mines that translates to roughly $100000 of savings per well and the Permian.
There are also significant environmental and logistical advantages, we expect the mine will reduce our annual truck mileage and Howard County by about 80%. It will also reduce our seo to emissions by about 200 tonnes per well.
We are continually pursuing efficiency initiatives like this throughout our operations and.
I'll now turn the call over to Brendan who will speak more to the role of the technology and innovation are playing across the company.
Thanks, Greg as Greg has just pointed out our efficiency gains are continuing in 2021, we often get asked about how we consistently deliver these gains.
We look for efficiency and everything we do and our entire team is relentless about innovating to make our business better.
This is a key part of our culture to identify what limits our performance today, and then unleash innovation and technology to eliminate those barriers. There are several recent examples of this across the company.
Our supply chain management team is harnessing data analytics and machine learning.
This approach streamlines, our back office work, but it also gives our team direct visibility into pricing for comparable products and services across our portfolio, allowing our team to drive down costs.
Our drilling and completion teams are updating their designs and real time using proprietary mobile apps to access and visualize live data.
This translates to fewer days on location and more effective completions driving lower costs and better wells.
And our production operations teams are using cloud based technology to optimize chemical pump rates and gas lift compression our proprietary code behind this automation works in combination with our operating control Center, which provides 24, seven and surveillance and automation of our wells and facilities. This translates to low.
<unk> low and higher uptime.
Each of these innovations plays a role and in combination and they add up to meaningful value.
We've created a capability, where we break down complex problems and find ways to make things work better.
And every part of our business from drilling simultaneous wet sand artificial lift to how we market our products and to our supply chain and then.
Most powerful part of this approach is that every person of the company can contribute and we see this as a competitive advantage and it's a big part of the reason we're confident we can deliver on our 2021 targets I'll now turn the call back to Doug.
Thanks Brendan of it.
<unk> remains at the for forefront of our industry's transition to a new more sustainable business model. We believe we have all of the components to deliver differentiated returns to our shareholders. We are on track to deliver free cash flow for the fourth consecutive year. We are committed to a disciplined approach to allocating capital.
And are on track to deliver free cash flow and significant free cash flow for the fourth consecutive year.
And we remain committed to returning cash to shareowners, we believe our dividend is a key component to returning cash to shareholders and we did not touch it through the challenges of 2020 and.
And the near term, we believe strongly that the best way to increase value for our shareholders is through reducing our debt and we've talked extensively on the significant progress we've made over the past three quarters and the progress we expect to make over the balance of the year.
We are committed to industry, leading ESG performance and our teams are incredibly focused on reducing emissions and using technology and innovation to unlock further gains our flaring and venting volumes have dropped dramatically over the last 12 to 18 months and are today amongst the lowest and the industry and well below the limits being just the.
And many jurisdictions and we are on track to deliver early on are 33% methane intensity reduction target.
We believe reducing emissions is the first and most important role of our industry today and addressing climate change and we are and intend to remain a leader in this area. We also see tremendous opportunity to accelerate industry efforts through collaboration with our peers.
Efficiency has and always will be crucial and our business and we have the proven ability to drive leading efficiencies and continuously improve to enhanced returns grow margins and generate free cash flow. We do this in many ways, but none are more important than innovation, our operational excellence and sophisticated risk management.
Our differentiated and continue to create value quarter over quarter. Finally, we have the size and portfolio of diversity necessary for future success, our world class core three assets and the Permian Anadarko Montney provide multi basin and commodity diversification cross based on the learnings and more than a decade of <unk>.
Inventory at our current development pace. This concludes our remarks and operator would be now with now we'd be happy to take questions.
Thank you.
Ladies and gentlemen, as a reminder, you can join the queue to ask the question by pressing star one.
I'll now begin the question and answer session and go to the <unk>.
Caller from Neil Mehta at Goldman Sachs. Please go ahead.
Good morning team and congrats on a great quarter, and it's great to see the debt reduction timeline of accelerated and.
And the past the incremental shareholder returns improved when you discuss various options for.
And returning capital to shareholders. Once you get your balance sheet and good shape. How are you thinking about increasing the base dividend versus implementing a variable dividend of sorts or share buyback program is there any method that you think screens more attractively and at the forward curve.
And when do you think we're going to be in a position to start having these conversations.
Yeah, Good morning, Neil and thanks for joining us and your question and.
And by the way I'd just like the question because it it recognizes the progress we've made on that and and it sounds like the confidence folks have that will continue to make that progress I think the first thing I'd say, though is we need to get we need to get to our debt target of $4. Five it's clearly accelerating is clearly getting closer.
But we need to make sure we get there.
And then I had just three things first as we've said many times with our board. We're discussing a number of options and nothing is off the table, but I would emphasize two things.
We believe the base dividend is absolutely core to our offer to shareholders I mentioned that despite the challenges last year, we didn't touch our dividend our shareholders could count on that check every quarter and it showed up every quarter.
But it's a core component of the offer and we need to make sure. It's set in the right place that it's sustainable but it also has a consistent source of cash return directly to shareholders and the second thing we need to assess is is for five the right level of debt or should we actually take it further.
So more on this and the future and clearly, we're making great progress here, but we need a bit of a bit more time to mark our progress and then continue these assessment, but I would highlight that that base dividend and making sure our debts and the right place are probably the two highest priorities we have.
Thanks, Doug and and then turning to the assets it seems like you're allocating more activity towards the Scoop region of your Anadarko basin assets relative to past is there a scenario for greater liquids uplift as a result and chip.
Can you provide some color around the cost efficiencies you expect to see there given the well cost traditionally have been higher and that part of the country.
Yes, I think first you know the.
We have a obviously a bigger position is up and the stacked and the scoop and but we have and will continue to develop the scoop, but the inventories more of limited. So we'll be doing this as it makes sense, but our efforts there like our efforts of the where are actually continuing to unlock new locations, which is encouraging.
But the cost thing is pretty amazing it wasn't very long ago. When scoop wells were 10, 12 $13 million and and as you heard Gregg talk about he just talked about $5, two but maybe I'll hand over your question about efficiencies to Greg here.
Yes. Thanks for your question and then <unk>.
Continuing to see the same kind of efficiency improvements and the scoop that we've seen in the stack and that we're seeing across all of our portfolio and or just the teams have been relentless and focusing on driving down costs and driving down the amount of days, we spend on our wells and that's resulting in lower well cost and better returns.
And so we think we're going to continue to see that across the scoop, the stack and and all of our portfolio.
Thanks, guys.
Thank you. Our next question comes from Brian Downey of Citigroup. Please go ahead.
Good morning, Thanks for taking my question and maybe I'll start a question on your capital spending I believe your prior commentary suggested a relatively level loaded capital program for 2021, which if we annualize the first quarter spending is running a little below your full year guidance I'm wondering if there's any timing noise within the remaining three quarters.
And the comments you made about potential sources of inflation versus and efficiencies are disproportionately affecting the remainder of the year or if you just won another quarter under your belt of strong cost performance and efficiencies before of formally adjusting that and.
So that there and then any early reads on how those trends could play out for for next year in terms of capital efficiency of absolute spend.
Yes, Brian Thanks for the question I think that we are.
It is still April actually so it feels a little early to be adjusting guidance.
We're pleased with the progress.
But I have to say that of Greg and his team. They know the expectation is we're going to get more efficient regardless of the environment.
If we have things like inflation, we have to double down on efficiency gains elsewhere. I mean, one of the coolest things. He just talked about was this wet sand mine and and Howard County and the.
That's and Fantastic example of things, we do which offset inflationary pressures and net net drive costs down by the way. He didn't mention I don't believe on that but something else. It's very good. We we all know silica dust is a concern and the industry and when we use whatsapp and we actually have no silica dust.
And that this is great progress on health and safety and not just on cost and.
We had a little bit of noise in the quarter around activity, but most of it was driven by inflation.
And let's get a bit more time under our belt before we before.
Before we actually reset or reconsider resetting.
And the capital target.
We're comfortable where we are the other thing just to reiterate is we didn't have any capital allocated to the Eagle Ford or Duvernay. So those divestments didn't shift the number as well.
Great and then maybe one for Greg I'm curious of your experience with simultaneous in the Montney now that youre using and on the vast majority of wells that seem to be an area, where both the the D&C cost trends and production trends were solid and the quarter. So I'd love to hear any early learning from from the Montney on simultaneously and what we can expect going forward regarding that tech.
<unk>.
Thanks. Thanks for your question and yes, I think of one of the great things about the way we.
Execute on our wells and the innovation here at <unk> is and we get on an idea and one area and find out that it works and then we quickly move that around the organization. So as you know Osama Frac started out on the Permian and the teams are saw great success, we moved it to the Anadarko and now we've moved it to the Montney, It's a really simple innovation.
It's not high tech at all of our simply splitting the flow that comes out of the.
And the wonder of the well and and sends it to two wells and so we're able to frac two wells at the same time it doesn't change the intensity that we use on the wells, we're using similar pounds per foot and gallons for fluids, we normally would but.
But we adjust our stage spacing or stage links in order to get a very efficient completion and and those operations, but it allows us to while we're fracking one well or one pair of wells to complete the other parallels with the perforating and a plug setting and so.
And what to do kind of a dual track and complete frac, one well, while we're prepping the next well and that allows us to really speed up our cycle times and so our cycle times and the Montney and now we're routinely pumping up to 20 or more hours per day, which allows us to get just significantly more utilization out of our frac equipment and allows us to really reduce the number of day.
As we're able to suspend and completing the well and as you know days of dollars on our business and that's one of the main drivers behind the costs coming down and on our Canadian operations is completing those wells significantly faster with Simon and and.
And we're seeing really good consistent results. So yeah. Some of Frac technique has not not.
The reduced our performance if anything were seeing as good if not better performance out of the wells that we're using some of frac on so we're very pleased with the results and again a great example of just taking and innovation from one part of the organization and quickly moving it around to all of the different basins. So we get the full advantage of that of that new innovation.
Great and I appreciate it.
Thank you next question comes from Jeanine Wai of Barclays. Please go ahead.
Hi, good morning, everyone. Thanks for taking our questions.
Good morning.
Good morning.
Question on maybe just the follow up Neil.
The question.
And you indicated that you need to make sure that the base dividend.
On the right. Please can you provide a little more color on what metrics youre looking at to determine what the right place is for Tim.
For example, some of your peers.
Limiting the base dividend of call. It maybe 10% of cash flow and then supplementing that others talk about just trying to have a competitive yield for the broader market with this cash.
And the stock price component and that but just wondering if you could give a little more color on where you.
And then.
And ultimately go to.
Yes, Janine and and you know I definitely don't want to front run on our board here that that wouldn't be wise, so but I think this is there's really two things we have to think about which is it.
And sort of what we always refer to as sort of a mid cycle world. How do you think about what proportion of cash flow should be returned.
To the shareholders through the base dividend.
And there's a range in there you've talked about it.
Being talked about and the industry I'm not ready to today to talk about exactly where that is the other thing we believe strongly and it served us incredibly well.
The last year is we also need to make sure it's consistent and stable through the cycle and what that means the way. We look at that is you need to test it sustainability at lower prices, so that you're not having to pay that from that but you can pay it from cash flow. So we're doing that assessment.
And today and when you combine that as we close and on our debt target and consider whether we need to further reduce debt beyond that we'll be talking more about it but that's that's framed and I think I don't think it's prudent to be talking today about our variable dividend, where and when we first need to make sure of the base dividend set and the right place.
Okay.
Thanks for the color there my second question and maybe just hitting on the divestitures quickly.
Moving on and Eagle Ford, which is great accelerated the debt reduction and everybody wants to see.
Do you consider selling any more of the base assets.
And it is interesting that recently, we heard some operators are reconsidering selling assets given current oil prices allow them to deleverage faster.
Yes on the valuations that youre seeing and the market on the backward dated strip might be a little bit lower and sort of China accelerate the deleveraging. So they can do that better by keeping the assets. So just wanted to touch base on where you are on the other assets.
Thank you.
Yeah, Jeanine I think if the.
The first of all you know I could I could use the famous quote from Georgia Popovich and is this just between you and me but.
But I think what we really think about it on assets and this included the Duvernay and the Eagle Ford at first test to make sense strategically, it's not a tactical effort.
Just to reduce debt so if the if it didn't make it.
And if it made sense, if those assets needed to be retained and the portfolio of strategically they would've stayed.
But when those two events combined it made sense to divest of them. We believe the portfolios in the and the right place today, we believe as we talked about and our multi basin portfolio. We also believe and a multi product portfolio.
And and we're there today, so I'm very comfortable where were at I believe we of high performing assets and the portfolio and I believe what we're doing today extract the most value from those assets for our shareholders.
Great. Thank you.
Thank you next question comes from Neal Dingmann at true with Securities. Please go ahead.
Good morning. Thanks for the time My first question is really just on the flexibility of your current plans specifically I think the last you continue to say youre running format and the three Permian to energize the rigs and I'm just wondering.
Is there any flexibility would you think about change this depending on what if.
And if NGL prices continue or.
Other things sort of continue or is this.
Pretty much the plan for at least this year.
Yeah, you know, we don't really you know it is.
As you know if you're focused on returns and the price on the screen at the moment isn't what what really drives returns. It has to be you know you think about the price you're going to receive over the balance of the life of that asset versus the capital you've put in.
So I don't see today a movement there as you know there was some optimism and the natural gas market coming into the year that turned out not to be the case and of course, we didn't adjust our capital with that short term optimism and we take a much more fundamental look at this so I don't see that affecting it and we also are committed to this multi basin portfolio and.
And we're able to fund our core assets are one reason is because they have very similar returns and those they do have slightly different product mixes and as you've highlighted we produce a lot of ngls over 80000 barrels a day and that market, particularly for propane and butane has been very strong not only by recent standards, but.
By the standards over the last five to 10 years, and having that exposure allows us to benefit, but I don't see it driving at least know reallocation of capital.
Okay, Okay, great great Great details, Doug and then just a quick follow up.
Probably Doug I guess for you or maybe Corey just on the hedges net notably you know.
Obviously different story for next year look at least at this point like it'll work and your favorite <unk>.
Thoughts on I know Theres, a lot of investors out there that prefer especially given how and improve your balance sheet will be at that time and how much larger the company is maybe not doing as much as maybe what you've done in the past I'm. Just wondering how you sort of think about entering 'twenty two and 'twenty three how you would think about.
And maybe lock on some things in.
Yeah, and I'll make a couple of comments and then ask if Corey has any but.
And we think of of of hedging is really risk management and helping to support strategy implementation.
You know I'd like to say, we're smart and the market, we actually do have a pretty darn. Good track record of <unk> team does but were not traders. This is all about supporting strategy and managing risk.
So obviously as our balance sheet strength and so that's one of the risks and diminishes. So it will impact that.
And if you look at us historically, the amount, we're hedged and any given year is different and changes and it's not really about our fundamental view on the price of the product and it really is about what risk management what protection, we're trying to put in place the core of anything you'd like to add.
No I mean that for Ya.
Sums it up just to remind.
Neil it's really more about what the strategic driver is for the right level of hedge that we put in place so.
And as you know when you look at it quarter over quarter, we tend to evaluate that on an ongoing basis. So it's not just once once a year. We look at it we look at it on a regular basis with the fundamentals team <unk>.
Expertise.
No that details of all makes sense, thanks, guys nice job.
Yeah.
Thank you. The next question comes from Noel Parks of X Tuohy Brothers. Please go ahead.
Good morning.
Good morning.
Sadly one.
I'm wondering could you talk a little bit more about.
And what <unk> been able to do you talked about with.
I guess I'd call it the big data technology and tools.
In terms of just the.
And the subsurface and your completions.
Okay.
Yeah.
The comments and ask Brendan to speak into this but.
And I think we've got to find a way to highlight this there's some some really amazing things going on and the organization.
With the application of technology and <unk>.
And in innovation and I would highlight greg's comment not all innovation is high tech because of.
Silo Fracs basically plumbing.
But it was creative plumbing and actually.
The wet sand concept is also not high tech, but it's very innovative and by the way we patented that concept as well.
But we're actually using a lot of digital technology for everything for reducing emissions to continuous monitoring.
And for safety like we can tell with our with our monitors. These days with the employee has stopped moving which might be and indication they're in trouble and weekend and send out help try to contact of and send that help for us.
And we're using it for AI to do things like optimize gas lift and and the operating equipment, which is real time as opposed to just went on and operators present and for quite some time, we've been using big data to help us understand how to optimally develop the cube.
And what it really allowed us to do is not just change one thing at a time, but the change multiple things at a time and understand the difference but.
And we've now exhausted my limit of knowledge, so I'll hand, it over to Brendan yes, Thanks, Doug and I. Appreciate the question I think.
We've highlighted through the conversation today, the the impact that innovation is having on our results and our performance and.
And we've got a high connectivity across the whole team into solving these problems and I'll just maybe use the winter storm Yuri as an example, and one of the things I spoke on a few minutes ago with the the proprietary.
Criteria of code, we've developed to automate our gas lift systems and so as that storm began to hit and and then impact to operations and Texas and Oklahoma. The the automated controls on those gas lift systems, where a big part of helping us keep production on longer and then bring it back on sooner.
As a result, because it meant that we didn't have to have boots on the ground at every well site and facility and the field, we're able to drive that autonomous Lee through our centralized control room, and so you know.
And this has been a backbone that we have been building in the company for a long period of time and so now the expertise that that's being deployed against it is adding new.
The sophistication as we go.
Okay.
Great Thanks for that and that.
I was wondering.
Just given.
You're sort.
For the deep knowledge and the basins here in the convention base and view.
Past experience and.
And if you do you envision I guess I am thinking of essentially about real time completion data.
Do you envision the.
The VAT or other tools have and the ability to possibly expand the footprint of any of your players and just thinking about some of the more complex geology and of the and the stack or or Jeff.
And so thin that it.
Wouldn't be practical for some of them before but now actually.
It might be workable.
Yeah, no it's actually a great question, and it's actually pretty strategic as well the.
If you look at.
And we kind of maybe all of us and the industry kind of maybe don't quite appreciate.
What we've accomplished over the last 567 years, we've taken of new play concept.
To make it one of the biggest sources of supply of oil and natural gas and the world and leading efficiencies and doing that and and on almost every front, whether thats about cost or whether it's about emissions and the other things and it's.
It's all driven by innovation and it's all driven by constantly thinking about new ideas at set all of the wallets Pratt who is the famous geologist of 80 years ago, who had great, saying, which is also not found on the ground. It's found in the minds of men and women, which is what you see happening every day, but.
What we've been able to do and the stack is a fantastic example of it clearly of play that was out of favor.
But through innovation and Greg highlighted the movement of learnings across the portfolio, we've got to play which generates competitive returns with any play.
And tied to your question.
We are now drilling in areas with just a few years ago, you would have not thought would of justified the application of capital and that's a combination of what we've been able to do on cost you. Your earlier question about using big data to understand what drive results.
A lot of that now is about completion design. There is still a great deal of learning happening about how to make a better well and.
And it's and block more than just pump a lot more sand, it's how you actually execute that job and design that job and what it's doing is it is unlocking new opportunities within our portfolio our inventory of essentially right now of stays flat every year because through this application of innovation technology and cost reduction, we unlock new opportunities.
And at least of the scale of the ones, we drilled and the last year of creating.
Creating a bit of of perpetual motion machine and this space and I won't go forever.
But this rate of innovation and I do not expect the stop because at least and our company is why people come to work every day is to be of part of that and to drive it.
Great. Thanks, a lot.
Thank you at this time, we have completed the question and answer session and we'll turn the call back over to Mr. Campo.
Thank you operator, and thank you for everyone for your coverage and investment and our company have.
Of a great day.
Ladies and gentlemen, this concludes the conference call for today, we thank you for participating and we ask that you. Please disconnect your lines at this time and enjoy the rest of your day.
Okay.