Q1 2021 Ring Energy Inc Earnings Call
Please standby and operator will assist you in a moment.
[music].
Welcome to the Conference Center, please standby and operator will assist you in a moment.
[music].
Of course call what conference would you like.
I would like the do it for ring energy.
And can I of your name Sir.
David Brown.
And the company or what.
IRA.
Thank you for that share I'm gonna joint events of the call.
Impacted by the Winter storm, we sold 716422 barrels of oil equivalents or 70, 960 Boe per day, which was approximately 15% less and the fourth quarter, we incurred shut in and deferral of more than 60% of our production for the majority of the storm.
The restoration of most of the production taken more than two weeks to complete.
Our first quarter financial performance was also negatively impacted by additional cost to bring these wells back online for.
Other contributing to the decrease in sales volume from the fourth quarter was temporary downtime associated with shutting the in offset wells during the completion operations of our for northwest shelf Phase one wells, we completed during the quarter. We also experienced temporary downtime during the quarter on the nine wells, we converted from electrical submersible pumps.
The Rod pumps are what we call of <unk> of those nine and Ctr as we completed seven of the northwest shelf and two and the Central Basin platform and as a reminder, and as we've discussed in the past, our ctr and reduce overall operating costs and help stabilize production levels and we will continue with this initiative for moving forward.
Due to the incredible efforts of our employees during the storm many of whom at the same time, we are facing their own challenges at home.
We're able to return our operations back to substantially pre storm production levels as quickly as possible and this was evidenced by our average net sales volume.
Of almost nine day 100 barrels of oil equivalent per day for March which does not include approximately 200 barrels of oil equivalent per day associated with the full restoration of certain third party gas processing facilities damage during the storm.
Our targeted development activities helped to partially offset the impact of the storm as we completed and placed on production. The for wells included in the northwest shelf Phase one drilling program we.
We saw a collective production from the for wells of 37550 barrels of oil equivalent and March and production levels from the wells continue to meet or exceed our expectations.
As important all for well were completed on schedule and within budget.
Finally.
We benefitted from a much higher commodity price environment during the first quarter, which resulted in a 26% increase and revenues from the fourth quarter. Despite the impact of the lower sales volumes. This is included in the average realized sales price for crude oil of $58 a barrel that was 43% higher than the fourth quarter for natural gas.
Our average realized sales price of $6 46 per Mcf represented almost threefold increase from fourth quarter and was primarily driven by the spike in natural gas prices growth in February of Winter storm.
The combined effect from all the factors I. Just described resulted in first quarter of 2021, adjusted EBITDA of $19 million debt contributed almost $3 million of free cash flow I am pleased to report on.
This marks our sixth consecutive quarter of free cash flow generation also contributing to free cash flow. During the first quarter was the sale of exchange of certain oil and gas assets and Andrews County, Texas with the <unk> Fisher operating Inc. For which we received a net value consideration of $2 million and cash.
And we utilized a portion of our free cash flow during the first quarter to pay down $7 $5 million of bank debt and ended the period with approximately $46 million of liquidity of 14% increase from the end of the fourth quarter.
With that I will turn the call over to travel to discuss our financials in more detail I will then come back.
To make a few closing comments Travis thanks, Paul for the first quarter of 2021, we generated revenues of $39 5 million and recorded a net loss of $19 1 million or <unk> 19 loss per share included and the loss for pretax items, including $25 7 million for noncash unrealized losses on hedges.
The result of the change and oil prices and 355000 for share based compensation expense.
Excluding these items, our adjusted net income was $7 million for.
For the <unk> gain per share.
During the first quarter of 2021, we had $15 4 million and cash flow from operations of <unk>.
<unk> thousand $14 5 million and capital expenditures and $2 million and proceeds from the bench Fisher transaction. The combined result was positive free cash flow of $2 9 million.
For the three months ended March 31, 2021, we had oil sales of 610121 barrels and gas sales of 637808 Mcf for a total of 716422 Boe.
As Paul discussed our realized prices were significantly higher and the first quarter compared to the fourth quarter. This included first quarter average pricing of $58 per barrel of oil and the exceptionally high price of $6 46 per Mcf on natural gas for an average of $55 and <unk> 14 per Boe.
The differential between our average oil price received and the weighted average Nymex and <unk> was 37 per barrel and the first quarter of 2021. This was an improvement from our average fourth quarter differential of approximately $2. This was primarily a result of renegotiating our oil contracts to receive a better marketing adjustment at the beginning of February.
The <unk> WTS spread went from an average of 16 and the fourth quarter, two and average of $1 eight and the first quarter.
And the Rguest CMA role went from an average of negative 35, and the fourth quarter, two and average of negative <unk> <unk> for the first quarter.
For detailed discussions of our other income statement line items. Please refer to our earnings release and 10-Q that was filed yesterday of course I will be happy to answer any questions you might have during today's Q&A session.
Echoing Paul's comments were pleased to generate free cash flow once again during the first quarter of 2021, and further pay down debt of $7 $5 million. We expect to continue to use much of our free cash flow for this purpose with the cadence of debt pay down primarily driven by market conditions and the timing of capital spending.
As of March 31, 2021, we had $305 $5 million drawn on our revolving credit facility and liquidity of $46 $2 million, including $45 5 million available on the revolver and $1 7 million and cash for.
Finally, despite the impact of our winter storm on our first quarter results. We are reaffirming our full year 2020 outlook, including year over year average sales volume growth of 2% to 8%. The equates to 9000 to 9500 Boe's per day with approximately $85 to 87% oil for full.
Year 2021, we anticipate and average lifting cost of $10 to $10 50 per BOE, which reflects a decrease compared to the full year of 2020 lifting cost of $10 52 per Boe.
And costs include lease operating expenses and gathering transportation and processing costs.
Turning to our 2021 capital investment program, we continue to target capital spending of 44% to $48 million with all expenditures to be funded by cash on hand and cash from operations.
In addition to company directed drilling and completion activities, our capital spending outlook includes targeted well reactivation and workovers infrastructure upgrades and continuing our successful Ctr program and northwest shelf and Central basin platform areas.
Also included as anticipated spending for leasing contractual drilling obligations and non operated drilling completion and capital Workovers are 2021 capital program has been designed to sustain our minimally grow our production and reserve levels and have returns and sufficient to generate free cash flow to further reduce debt I would.
Note that our existing commodity hedges were implemented last year to ensure that the net necessary cash flow was there to adhere to adhere to these plans and so with that I'll turn it back to Paul.
Thank you Travis.
While we clearly had to navigate some significant operational challenges during the first quarter as a result of the winter storm that crippled much of Texas for several days in February we remained focus on the execution of our work program and more importantly, our strategic vision.
If you recall during the fourth quarter and full year of 2020 earnings call in mid March we provided a detailed discussion of our strategy and how we expect to achieve sustainable long term success of the benefit of our shareholders.
First we emphasized that our futures of SaaS and dependent on our ability to attract develop and retain the best people. We also define what we mean by operational excellence and why we believe it is important to pursue operational excellence with a sense of urgency is the fundamental aspect of the defines our culture and this includes executing our operations and of <unk>.
Safe and environmentally responsible manner being.
And being quick to apply advanced technologies, where it makes sense delivering low cost consistent and efficient execution of our drilling campaigns and our work programs.
Tenuously seeking ways to improve our margins and reduce our operating cash costs on a per barrel basis.
All of these things are vital to our future success.
We also reviewed why it is so important to allocate our capital to the highest risk adjusted rate of return projects and our inventory earlier. We discussed this expense we have seen from on for northwest shelf Phase one drilling program wells, where all of our placed on production and the first quarter with collective production results to date meeting on <unk>.
And our original expectations. We also previously announced our three well northwest shelf phase two drilling program, where we began drilling in early April and have since successfully finished those operations similar to our phase one program. All three phase II wells are anticipated to be completed on schedule and.
And budget, we expect all wells to be online by the end of May.
We also said that the combination of reducing our operating cost per barrel and targeting the development of only the highest risk adjusted rate of return projects and our inventory. So of course, our ultimate goal of generating and continued.
Sustainable free cash flow this will allow us to further strengthen our financial and market position and drive meaningful returns to our shareholders and provide additional financial flexibility to manage commodity price cycles and the future as such we remain focused on steadily paying down debt divesting of noncore assets and <unk>.
Becoming of peer leader and debt to EBITDA metrics.
And since I mentioned, the divestiture of noncore assets I thought it would take a moment to announce that we are opening our virtual data room and launch and the sales process of our Delaware assets Tomorrow, we have seen considerable interest and our Delaware assets since making our plans known earlier this year and are encouraged by the interest shown and.
And finally, we also shared that we will continue to pursue strategic accretive acquisitions that maintain of.
Or reduce our breakeven costs. We've said, we will only focus on acquisitions mergers dispositions that not only improve our breakeven costs, but also enhance our margins lower our operating costs and are accretive on a cash flow basis. We also said that our financial strategies associated with these efforts will focus on delivering.
<unk> risk and debt adjusted per share of returns to our shareholders.
So what has changed since we last spoke about growing through the MD&A well one thing is that.
We are starting to see asset sales entering the marketplace that we believe would make great additions to our portfolio. We also believe that other operators with similar assets and we're planning to bring them to market for sale as well and perhaps soon.
And would like to take advantage of these acquisition opportunities before oil prices improve very much more.
And and as we have previously stated we would like to accelerate the strength and member of our balance sheet through one or more strategic and accretive acquisitions and so how do we do that.
We believe that the best way for us to refinance two financing and accretive acquisition.
At this time is the primarily use equity. We also believe that if our existing stockholders are going to agree with us we will need to demonstrate two essential thing.
First the transaction will need to bring in sufficient production revenue and cash flow to improve our debt to EBITDA ratio, thereby strengthening our balance sheet and second the transaction metrics will need to be accretive to our existing shareholders. So the bottom line of this we will not acquire.
Assets using the equity unless it meets these two tests now before we take your questions I want to let you know about a change underway.
And the management of our Investor Relations effort, David Fowler of stepping out of his Investor Relations and business development role of range of start a new company called Permian Energy partners that will be headquartered in Midland and his new firm will provide A&D and other BMD BD services and as such he will continue to assist us.
<unk> and others and the marketplace to potentially identifying and bringing merger and acquisition opportunities and for consideration of want to personally. Thank David for his many years of dedicated service. The ring. He has held senior management positions and has always been a trusted public space for for ring. Since I joined the company last year, David has been and invaluable and <unk>.
<unk> resource and myself and the other new members of the management and management team and board and for that I am Triply Grateful and David is a true friend, we wish David Great success, and as new business endeavor and look forward to his continued to visit the relationship with him for years to come.
And now earlier this year to assist David and our Investor Relations efforts, we engage al Petrie advisors, who many of you know from there advising a number of other E&P and no other as companies al and his team have a long history of the successfully working with many clients and the oil and gas sector and we look forward to there.
Continued assistance as we further enhance our Investor Communications program and our earnings release, we included our contact info as.
He will be the primary contact for investors and analysts following Davids departure later this month and so with that I would like to turn it back over to the operator for questions operator.
Thank you Sir we will now begin the question and answer session. The Asquith.
The question you May Press Star then one on the Touchstone for.
And usually the speaker phone, we ask you. Please pickup your handset before pressing the keys to withdraw your question. Please for starting to.
Today's first question comes from Jeffrey Campbell with Alliance.
On the Alliance Global Partners. Please go ahead.
Good morning.
Hey, good morning, Jeff how are you.
I am fine, let me second via congratulations Dave and borrower on it.
My first of all of US Thank you Jeff bearing in mind.
You bet bearing in mind, the storm and.
And the produced volumes during the first quarter 'twenty one.
What are you guys doing the catch up considering the 2000 and 'twenty one guidance remains unchanged.
And I'm going to turn that over to Marinos Baghdad, <unk>, our executive Vice President of operations.
Good morning.
If we look at the total BOE production, we've had to date and what we're estimating April and may to be thin.
And what we need starting on June 1st forward is 90 around 94% 9500 Boe's per day in order to meet our 9000 and Boe's per day average for the year guidance and.
And we think we can get there with the phase two drilling program and the addition of the 200 Boe's per day that is currently shut in due to the.
The purchaser and the superior.
Okay, great, Thanks, and I appreciate that color and David.
I mean excuse me.
On the M&A front, you just said that you opened up the.
The data room for the Delaware Basin sale I'm just wondering.
The stronger oil prices and the increased industrial activity.
And starting to see.
How you feel that supports and the sale of broadly and also as an increasing specific interest and the saltwater disposal of assets that you're contemplating making available and the third parties.
Okay.
Well, yes, youre right on both accounts, but I'll tell you what I'm going to turn this question over to our executive Vice President of of.
The engineering and corporate strategy, Alex dies, Alex you want to take that yes. Good morning.
So yes, we've seen a renewed interest obviously with the price is coming up and and and the lumping of more activity and the Delaware basin and saltwater disposal asset that we currently have does have and increase value. So right. Now. We just have spent some time getting the field up to date and as Paul mentioned, we're getting it back on.
For the market as of Tomorrow and.
And we will run accelerated process and hopefully report back in the near future.
Okay, great. Thank you.
And our next question today comes from Neal Dingmann with true of Securities. Please go ahead.
Morning, Paul Paul of my first one for you and the team just you mentioned about.
Just going out for the highest sort of return locations order and keep generating net free cash flow could you talk a little bit about I guess sort of two pronged there one how.
And how many kind of locations you all again of side when Youre thinking about this right now of the portfolio still seems you have quite a few and then secondly, how do you plan to balance I'd like to hear a little more how you plan to balance that debt obviously.
And we want to see free cash flow, we'd like to see you mentioned in the earlier.
Answer about keeping the production flat. So if you could talk a little on that thank you.
Yes, very good and as you know we do have a very handsome inventory of the high rate of return opportunities not only of the northwest shelf, but although not quite as attractive at these prices today are central basin platform opportunities also are economic.
But.
One of the things that we committed to our shareholders. We committed to ourselves because we think of just good business practice and we're also committed to our bank syndicate that we were going to remain disciplined and until we brought our debt levels down to a certain levels.
As you know our.
Credit agreement has a for.
Debt to EBITDA ratio covenant.
And that's above.
And what we consider conforming levels, we would like to get our our bank debt and our balance sheet improve to the point, where we're well below three and a half two or two and a half and so during this time per period, where we still are.
Subject to the potential liabilities of having this much debt, we're going to remain disciplined and so yes, we could pour it on but what that does that also of accumulated debt and if prices were to fall back down to 2020 'twenty levels.
I just.
I would hate to be put into it.
Tough situation again, and so we're laser focused on on strengthening the balance sheet and reducing our debt and when we get our debt levels down and the balancing act will shift a little bit more towards growth.
And also generating returns for our for.
And our shareholders and I hope that answered your question Neal.
And that did and then you'll have I know in the past you've had some workover and various other opportunities to maybe not boost production, but but certainly mitigate mitigate the decline.
I'm just kind of curious now on the portfolios. There is still opportunities. There have you already performed most of those and that will keep the production the <unk>.
Slide production flat already.
Go ahead and Ram.
And we're continuing to.
First of those through our Workover on the capital program and.
In order to kind of maintain production. So yes, those are still placed and our and our work program and are being.
Performed yes.
Yes, and just to add to that.
And at the larger the the <unk>.
Production base and the larger group of wells that you manage workover opportunities are just things that come along with age and with.
More knowledge people work and the area and so.
Workovers, we will continue to be a.
And active component of our capital spending program. These.
And these types of projects tend to have higher rates of return they require a lot less capital than drilling.
Drilling programs are major infrastructure programs and that kind of thing and so yes. You can you can expect to see us continue that.
And the level or the participation of the percentage of our actual capital program for one year to index of one quarter to the next is really going to be a function of of what opportunities actually present themselves during that time period.
Very good thanks for the details guys.
And our next question today comes from Noel Parks of Tuohy Brothers. Please go ahead.
Good morning.
Hey, good morning, and all.
I also wanted to touch on the topic of inventory.
We are enjoying these oil prices and the rest of 2021 strip I think of in the sixties and.
I think 2022 is maybe 57 or something like that so.
With your location count and.
And in your slides you sort of describe the pud.
All the possible and prospective locations the.
The <unk>.
Last group being of course of much bigger bucket.
Is it is it fair, if we assume 50 or better realized or.
Let alone the 55 better realized pricing going forward.
Is it fair to think about.
How many of those might find their way back graduate up of tier.
Just in rough terms.
The better pricing environment.
And I guess.
Connected to that.
Do you think theres any fresh technical evaluation, that's that would be required and and looking at those at this point.
Well I'm going to tag team that with Alex, but before I get started.
You got to remember our pud inventory.
As of.
Is it something that is defined using FCC rules for determining reserves. Okay. So first of all you have.
Offset rules and all of that kind of stuff, but the biggest thing that drives the number of.
The pud and one area or another.
Yeah.
This last year really was the remarkably low price that we.
Used for determining the reserves current.
Price are considerably higher and so.
On the inventory that we listed as proved undeveloped.
And was largely due to the price that we were required of us.
Determine that and so then they end up falling over into another category and so we do enjoy a very sizable inventory both on the north of our shelf and the Central Basin platform I think is.
I think any anyone really understands how the economics on the mechanics work associated with the accounting and reporting of the disclosure of of of proven undeveloped locations on the regulatory rules and they understand what those limitations are and so I think it would be safe to say that we have a bigger inventory today at today's prices and.
And then those SEC price it Alex is there anything you want to add none of the only thing I would add is since we took over as the management team. We did bring in a new and both engineering and geologic review and technical review. So that's on an ongoing process and so we'll high grade and more and more of those locations that youre talking about and there'll be the.
Prices and that will become more economical than other sales, but we also want to make sure that we maintain a very capital disciplined approach. So we'll take the quarter to quarter and will add on inventory as needed.
Okay.
Great. Thanks, and just my second one.
Do you have.
You have a rough sense of.
When you might have the borrowing base.
<unk>.
And.
And any sort of and.
Intelligence from the banks as far as where they are they are looking at it.
The price deck.
And do it.
Yeah, and so we are.
That process is ongoing so I would hate to really share too much.
They have already share with us the.
The bank price deck debt will be using is higher than what we used and the last quarter.
And that's a good thing and.
Everything is going along very smoothly and we should complete this.
Redetermination this month, and we will have more to disclose when that occurs but right.
Right now.
Going on as a normal process and everything seems to be going along very smoothly.
Great. Thanks, a lot.
And our next question today comes from March of.
The private Investor. Please go ahead.
Good morning, Mark.
Hey, good morning, So I had them on mute on good morning, Thanks for taking my call.
Youre welcome.
I know you're working on lots of good things and I know you've touched on this generally debt.
Regarding return to.
Returns to the investors can you put any time line.
And when you think you might get to the point, where there would be dividends.
And maybe as the.
Connected topic.
I know a lot of money gets spent on the hedging.
Is that and rethinking given to the hedging strategy about the bunch of money that gets spent on that or is that still going to stay the same.
Yes, if you don't mind, Mark I am going to take the two points and reverse order.
So let's talk about hedges.
Last fall when we entered in our hedges that was in November.
And we started.
Three weeks prior to the layering in our first hedged for 2021, the oil price of $35.
If you recall back in those days, we had already done the analysis and determined what was the price level of we needed that.
And that would guarantee our ability to fund the work program that would maintain our production of slightly grow it but also provide us and the cash flow. So that we can ensure that we can pay down debt at.
At a level that meets or exceed the bank requirements and that price was $45 and so when we had the opportunity to lock in.
The cash flows and.
During that time period, you got to remember when people were just talking about COVID-19 vaccines and we're talking about all of these other different things. We had no idea what 2021 was going to show we had had.
And more confidence that 2022 would be better than 2021 for 2021.
We just wanted to make sure that we can ensure that we had those cash flows and we were not unlike a lot of the different companies and so going back to your question at that point, we were in a defensive position and our opinion and that we were going to take whatever steps are necessary to secure those cash flows and if we were fortunate to heavy and a higher price and.
Environment, we were willing to forego the additional revenue just to make sure that we could guarantee.
The debt repayment and to our banks and that we could have and work program too.
Sustain our production and maintain our liquidity that was really really important as you know and I'm glad you actually pointed this out and things have changed.
And so as we go forward now we're looking at you.
Using our future hedges and the hedging that we will do and the future will be more opportunistic and so now we will be looking at it from the standpoint, not only do we want to make sure that we.
Ensure our capital work programs, but now we'll be looking at the marketplace and in the more opportunistic way. So that we actually can capture and retain the upside for our shareholders and so we are right now and the process as we go through 2021 and going into 2022, we are now.
Switching from a defensive.
<unk> strategy more to a opportunistic hedging strategy.
Alright, thank you.
The other part of that question was any timeline on when do you think you might do dividends.
At this point I can't really tell you here's the thing that depends on several things first of all and so the healthier we get our balance sheet and the quicker we can get that balance sheet to two of healthy position. The quicker, we'll be able to to do either stock buybacks or variable dividends or.
And perhaps.
Continuing on with strategic.
The acquisition to generate real returns for our shareholders.
But and so and so.
So.
What are the things that will contribute to getting that balance sheet and a stronger position while the.
The sale of our Delaware assets will contribute to that.
The success and being able to use.
Equity and bringing down one or two of these asset acquisitions and and accretive manner that strengthens the balance sheet increases of the cash flows we can pay down our debt even more once we get to a position.
Sure.
We agree that our balance sheet of strong enough, we will at that point.
And.
One of the thing Thats and the last call. If you look at the amount of.
Of our cash flow of that we're allocating to paying down debt when were in and a position of where we no longer need to do that that'll be about the time, where we can take that amount of cash flow. We can turn that into a real returns for our shareholders and so it's really difficult for me to tell you when that will happen.
Stay tuned watches will be reporting on that you'll get a clearer vision for that and so the more success. We have in terms of accelerating the repair of our balance sheet. The quicker, we'll get to the point, where we're generating and delivering real returns for our shareholders.
I appreciate the the answers thank you.
Youre welcome.
And as of June.
Our next question comes from Jeffrey Campbell with Alliance Global Partners. Please go ahead.
Oh, great. Thanks for taking my follow ups.
Paul first thing when you are looking at the attractive assets as you've alluded to as potential acquisitions are.
Are you willing to go outside of your current sphere of operations or are you focusing primarily on your central basin platform northwest shelf backyard.
The answer is yes, the bulk okay. So first of all we are.
Our focused and the area, where we currently have operations and it just makes a lot of sense to do that.
I already have and outstanding field operating team and if I can take that field operating management team and spread them over more wells and more production I reduce my cost on a per well basis and.
And so we are focused in the Permian basin, where we currently operate however.
For more focused on the right types of properties that generate the right types of returns if we can buy.
Producing properties and the core of some other.
And that delivers the same type of returns.
That has undeveloped opportunities that have the same type of economics, we would be interested and that as well and.
We've worked all over there.
In North America, we know the bases and the United States very well.
No what those would be.
But right now we are focused in the area that we currently operate because it makes all of the sense because you can combine all of the synergies and really and have a few more things working for you.
Okay, and thanks for that color and if I can add one more on to this theme.
And you definitely emphasizing increasingly of the Dol with acquired production when Youre talking about leverage and.
And so forth just wanted to correct.
Are you concerned with that and inventory as well as production or if the price is right in the returns of rates you'd be willing to acquire a producing asset without a lot of.
On developed upside.
There you go so.
I would be willing to consider production.
But typically.
And there would have to be and advantage. We would have to have some kind of advantage in terms of being able to significantly reduce operating cost or create some additional value.
But I really do get excited about and opportunity that brings in with the undeveloped opportunities that have.
Similar economics, as our existing portfolio and so that's where.
And I really get excited but.
Not saying that other investments that are just producing properties would be off the table.
Again, we look at ourselves as a logical aggregator and consolidator of assets out here on the Central Basin platform. Many of these assets are a little older. But we also believe that were of low cost operator, and as we go throughout 2021 and 2022.
We're continuing to work on that very issue, we believe that being the low cost operator is going to be a key attribute to anyone who is going to be a success of laggard aggregator of azure on the central basin platform and the southern shelf.
Okay, Great and then.
That makes perfect sense, thanks, very much for the follow up.
And we've got time for one more.
Absolutely our next for our final question today comes from Jack.
A private investor. Please go ahead.
Yes. Thank you.
And your $44 million to $48 million Capex program for this year, we try and now includes the money you spent in Q1.
And after putting online the three phase two wells later this month.
And you guys planning to put online any more wells between the end of May and the end of the year.
I'm going to turn that over to of Marinos, who will talk a little bit more about our drilling and and other capital program, Yes past the second quarter with the three wells in phase II and once we bring those online we have plans and dollars allocated and our capital budget to add two to three more wells.
Okay and the other question I have is with respect to hedging for 2022, if I remember right you have about 500 barrels of about 5% five and 5% of your production hedge for 2022.
Other than being opportunistic, which obviously makes sense do you have any kind of schedule and mind in terms of adding more 2022 hedges.
I'll turn it over the Travis yes.
Added the 500 barrels this year, but in total we've got $22 50 I believe.
And we're also looking at another idea right now that we haven't put in place to unlock some upside potential in 2021.
And so potentially we could take the sealing off of.
One of our callers and put 500 barrels per day for the balance of 2021 and pushed that out into 2022 and two of swap that would be higher than our average pricing that we have now that would add to that balance that out.
A decent rate, but that would also free up cash flow actual cash dollars for this year and give us more time next year.
Just to add more production to kind of hit that up and.
And this kind of goes back to what we're talking about a little earlier, we're at the point and time now with the stronger oil prices.
And at our strategy has significantly changed last year, when prices were up and down from $42 of $35 and and we didn't know.
When the pandemic.
Induced economic downturn that really causes of the sharp downward pressure on all worldwide oil prices at that point, we just wanted to make sure we can guarantee and our cash flows but now we're looking at everything from on an opportunistic standpoint, and what travelers just described is.
And the opportunity or strategy change and we're actually looking at right now, we're actually and the conversations with.
And with the traders about finalizing of that deal and so you're going to see more of that going forward, but with respect to 2022, we're still studying that we're still reviewing those with our board and the risk Committee and so we're low will.
We will be announcing more on that as time goes on throughout the rest of this year.
Great. Thank you very much for the color.
Youre welcome.
And ladies and gentlemen, and I'd like to turn the conference back over to Paul Mccartney for any final remarks.
Again, everyone. Thank you very much for your interest and ring, we are really really excited about the future here.
And the economy and starting to open up people are going plays were seeing.
The the opening up of the economy influencing energy prices and energy prices have risen and I would love to see them continue to rise of course of many of us and the industry would like to see that.
But our work programs.
Right now are mainly described by disciplined I mean, we are going to continue to remain disciplined and until we get our balance sheet and the order that we think it needs to be we think thats. The right thing to do for our shareholders. We think of the right thing to do for our business.
The thing to do to manage our risks and once we get our balance sheet squared away.
At that point look out because we're going to look into the start drilling our wells and that we have and the inventory we will be looking to make more strides and additional strides and pursuing acquisitions MD&A activity will also inquiries that we have.
Full line of sight on growing this company and we'd like to ensure that we keep all of you as the.
And vested partners and so thank you very much for your interest and we look forward to talking to you again soon.
Thank you Sir This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
You bet.