Q3 2021 Evolution Petroleum Corp Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the evolution petroleum third quarter of fiscal 2020. One earnings release event. At this time all participants have been placed on a listen only mode and we will open the floor for your questions and comments. After the presentation. It is now my pleasure to turn the floor over to your host Ryan Stash, Sir the floor is yours.
Thank you.
And good afternoon, everyone and welcome to evolution Petroleum's earnings call for our third quarter fiscal year 2021.
Today, we will discuss operating and financial results for the quarter joining us for the call are Jason Brown, President and Chief Executive Officer, and myself, Ryan <unk>, Chief Financial Officer for evolution Petroleum.
If you wish to listen to a replay of today's call. It will be available shortly by going to the company's website or via recorded replay until August 11 2021.
Please note that any statements and information provided today are time sensitive and may not be accurate at a later date. Our discussion today will contain forward looking statements of management's beliefs and assumptions based on currently available information. These forward looking statements are subject to risks and uncertainties that are listed and described in our filings with the SEC actual results may.
Differ materially from those expected.
Since detailed numbers are readily available to everyone and Yesterdays news release. This call will primarily focus on key results. Our recent acquisition and how that affects evolution and our typical update on operations and our plans for the remainder of fiscal 2021, including capital spending.
I would now like to turn the call over to our President and Chief Executive Officer, Jason Brown.
Thank you Ryan.
Good morning, everyone and thanks for joining us today on the evolution third quarter fiscal 2021 earnings call.
Thank you for your continued support.
And interest and our company.
And I'd like to start off the call by thanking our team for their hard work of the past few months and.
In closing our recent transaction and the Barnett shale, we're extremely excited about this acquisition what it does for our company and shareholders moving forward.
The acquisition further diversifies, our after asset portfolio, which we feel reduces the volatility risk. It also improves the sustainability and support of our dividend.
Adding to our overall production and reserves.
This acquisition represents a meaningful step and growing our business without requiring additional personnel.
Or any material incremental G&A expenses.
While the supply and demand and balance remains and pricing still volatile.
We see many positive.
Many positives and moving forward and believe that this is an important step and gaining both size and scale to create long term value for our shareholders.
Turning to Delhi, and Hamilton Dome, we had an active quarter as we saw field work pick up do the uptick in commodity prices, our operating profit partner.
Partner <unk>.
And as returns and conformance projects and Delhi after approximately 18 months of limited investment REIT.
And redeploying capex spending after emergence from financial restructuring through bankruptcy last fall.
Although total barrels decreased slightly during the quarter at Delhi.
This was primarily due to the extreme weather that was experienced in the field in February.
Purchased cotwo volumes were up and the operator, we completed several wells and will take a while to recover the reservoir pressure and production loss from the following.
Loss following the <unk> and purchase pipeline failure last year, but we are starting to trend and the right direction and are very pleased with the attention and capital support the Delhi is getting in 2021.
And Hamilton Dome, we saw an increase in production primarily from the reactivation of wells that were shut in the last quarter.
Differentials have been relatively stable and resulted in Ham dome returning to profitability.
And contributing to our overall cash flows we continue to see positive earnings this quarter.
And of had revenues of $7 $6 million of 32% increase from.
And from $5 8 million and Q2.
Multi very pleased to announce our 30th consecutive quarter issuing of cash dividend.
In addition, we subsequently announced that we will increase our dividend by 67% of <unk>.
Per share for the fourth quarter.
Our shareholders know how important it is.
So we returned value to them and we are thrilled to significantly raise the dividend.
<unk>, even after having raised it last quarter.
We continue to concentrate on cash flow and total shareholder return.
We have historically provided an attractive cash return to shareholders. This quarter marks $71 million and cash dividends of $2 from 21 per share since the inception of the dividend program and.
In December of 2013, we are focused on delivering shareholder value and continue to look for acquisition opportunities that will provide cash flow support of our dividend with that I'll now turn the call back over to Ryan and run through some of the financial highlights and I'll wrap up the call by speaking briefly about our strategy and outlook.
And the M&A landscape, Brian Thanks.
Thanks, Jason.
And I'll share some more details regarding our financial results for the third quarter ended March 31 2021.
Please refer to our press release from yesterday afternoon for additional information and details for the full fiscal third quarter 'twenty, one and look out for our form 10-Q to be filed soon.
Highlights for the third quarter of fall as follows as Jason had mentioned, we paid our 30 <unk> consecutive quarterly cash dividend for common shares on March 31, 2021, and declared of <unk> <unk> per share dividend for our fourth fiscal quarter payable on June 32021, which is the 67% increase from the prior quarter.
And also as we had previously announced actually yesterday that we closed on substantially all of our acquisition of the non operated the oil and gas minerals and working interest and the Barnett shale for $18 $2 million net of preliminary purchase price adjustments I would add that this is just the preliminary purchase price and we will continue to adjust as additional cash flow.
Those are received as a result of the typical lag and revenues for non operated properties.
Total revenues increased 32% over the prior quarter to $7 6 million and we generated cash flow and excess of the quarterly dividend and ended the quarter with $17 million and cash and no debt.
Also note that the $17 million of cash is net of of $2 3 million deposit and we made last quarter for the Barnett acquisition.
And finally, we completed the spring Redetermination of the credit facility and increased the borrowing base to $30 million.
Also this number does not include any impacts for our Barnett acquisition.
The increase and total revenues by 32% for the quarter from.
Two $7 6 million from $5 8 million and the prior quarter is primarily due to a 38% increase and oil prices, which averaged $53 52 per barrel net production was down 5%.
This quarter to 1000, and 708 BOE per day as Jason mentioned, primarily due to the severe winter storm experience at Delhi in February of 2021. However, if you adjust for the downtime we experienced the Delhi average production would have been approximately 60 barrels per day higher for the quarter.
Lease operating expenses increased 20% to $3 6 million and the second quarter compared to $3 million and the prior quarter.
This increase was primarily due to an increase of 400000 for purchase Cotwo, which represents a full quarter of Sidoti purchases of Delhi as of purchases had just resumed in late October of 2020. After the pipeline prepare also contributing to the increase and purchase cotwo cost is of higher realized oil prices and keep in mind that the sidoti costs.
The high is driven by the price of oil.
The remaining increase and lease operating costs of 200000 was primarily due to an increase and the amount of workover activity by by our operators and the current quarter.
General and administrative expenses remained flat at $1 8 million as increases and <unk> acquisition related legal and tax expense and the current quarter were offset by decreases from certain onetime consulting and legal expenses associated with the company's CFO search in the past quarter to note, we incurred approximately 400001 time legal and tax expenses.
This quarter due to acquisition activity.
We recorded an income tax benefit of 200000, and the current quarter compared to the benefit of $3 2 million and the prior quarter, resulting in and it was the 90%, 93% decrease or $3 million.
This decrease is primarily attributable to the pretax loss of $15 9 million and the prior quarter due to the impairment that we took compared to a pretax income of $1 million and the current quarter.
Net income for the current quarter was $1 2 million or <unk> <unk> per diluted share compared to a net loss of $12 7 million or <unk> 38 per diluted share and the previous quarter again. This increase of $13 $9 million is driven by the noncash impairment that were re recorded and the previous quarter.
Capex from maintenance and plugging activities was approximately $100000 of this quarter as we mentioned previously of conformance work has resumed the Delhi and we expect this capex number to increase for the fourth quarter and full year 2022.
We are currently estimating 250 to 500000 for the fiscal fourth quarter and $1 $25 million to $2 million for fiscal year 2022.
As Jason mentioned and the majority of volume shut in of Hamilton dome. During the low price conditions last year had been returned to production and future reactivation and will be considered based on commodity pricing.
There had been no updates to our reserves and we continue discussions with <unk> and look forward to the development of phase five at Delhi, which is still expected to begin and calendar year 2022 or 2023.
Working capital decreased by $1 5 million from the prior quarter to $20 1 million. This decrease was primarily attributable to two two the $2 3 million deposit of previously mentioned that we made from the acquisition of the Barnett shale assets. This.
And this deposit was applied to the adjusted closing price of 18 to $18 2 million.
And we ended the quarter with $17 million and cash after paying out $1 million of dividends and continue to maintain and Undrawn credit facility.
And this concludes our review of financial results and operations for our fiscal third quarter ended March 31, I'll now turn the call back over to Jason for final remarks.
Thanks, Brian.
I'd like to express how pleased I am with the development of our organization all companies have had to figure out new ways. The conductor business this past year.
But I'm very proud of the resilience of our crew and the culture that we've built with each other.
Transactions are never easy.
But when you operate with a small team as we do keep overheads down and it's even more critical with everyone and be willing to wear multiple hats and pull together.
The acquisition was the significant step for our company and the economic merits that our shareholders will benefit from many years.
But it was also of great vehicles, the gel our team we've.
We've had some personal personnel changes of the last year with the retirement of our CFO and the appointment of a new audit chair and I can't say enough about the quality of our people and how well they've come to work together.
And I believe that we have demonstrated that we have the infrastructure and ability to source of evaluate and execute transactions, which is what our shareholders need us to be able to do to grow the company and long term support of our dividend.
The M&A landscape seems to have opened up a bit the past few months pricing, although always volatile and still existing in the supply demand imbalance.
The have stabilized enough to generate deal activity and tightened the bid ask gap and a way that has made transactions possible and some cases.
We are seeing a flurry of transactions, both marketed and privately negotiated.
We're hopeful that we will be able to add to the successful Barnett show acquisition with additional properties over the coming months, we like the diversity of the commodity mix that we now have but plan to continue to focus primarily on assets that bolster our cash flow and the short term and long term support of.
Of our dividend without specific bias towards any of the commodities.
I will reiterate that we strategically look for additional low production decline long lived reserves to add to our assets. We will continue to contribute to our dividend for many years to come and we remain in a great position and I look forward to the future of evolution petroleum.
With that I think we're ready to take a few questions operator.
Please open the line for questions.
Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask the while posing your question. Please pickup your handset if you're listening on speakerphone and provide optimum sound quality. Once again, if you have any questions or comments. Please press star one on your phone. Please hold while we poll for questions.
Your first question is coming from John White Your line is live.
Good afternoon and.
You've got a lot of good news congratulations on the quarter a lot of good news to talk about increased the dividend.
I got the Barnett shale closed and you've got the borrowing base out of the way so.
Okay checked off of a lot of boxes.
While we've been talking about for a while it was nice to have it all come together and it did produce so pretty recently so very pleased with all of that we probably you mentioned the borrowing base, we probably will have that re determined once we've now funneled and all of the Tokyo gas because of the Redetermination, obviously wasn't and that will extend the borrowing base even more but.
But yes.
And would like to get that done.
And thanks for the conference call.
And the.
You mentioned.
Two at Delhi average $64 5 million.
Cubic feet per day and.
That was up substantially from the.
Prior quarter.
And you mentioned you expect.
That level of injection to continue.
Through the end of that of your fiscal year.
Yeah.
Yes.
If my Memory's working correctly.
Pre pandemic what is in the.
The cotwo injection of the $80 million.
Cubic feet of day range.
Yes, we average is kind of in the 83% to 85 million a day and Thats correct John.
Haven't been able to ramp up to full capacity yet with the series of work that have been.
Done at the Jackson dome facilities, so the big Jacksonville facility supports cotwo for a number of them various fields and.
And.
The seem to be the year that a lot of things needed to be repaired.
So.
They got the pipeline repaired, but then there is there are several things at Jackson dome.
Of the three main facilities, there that have gone through essentially of turnaround.
And so what has happened is the other.
The other fields of had to share a little bit so.
71 is not where we want it to be unfortunately, the expected finish of all of that turnaround of work, which is about this time April may.
It's probably not going to allow us to get too much more.
And so and of the fiscal year and Unfortunately thats in the summer time, when you know it gets a little bit warmer and so we have some visibility issues.
And what they've told us that they plan to ramp up Sidoti.
As soon as the temperature start to break in the fall So probably October and pretty much all next winter they plan to ramp up to about 100, the 110 to beef up reservoir support Unfortunately, because of the timing of these other repairs of facilities. The spring and then the miscibility issue. This summer.
You just cant put away that much cotwo.
And warmer temperatures were going to have to probably wait and so it's probably going to average somewhere in that 70% to 75% throughout the summer.
Well thats excellent detail and let me make sure I understand.
Excuse me.
The Youre planning to get up and the 100 100 and can range at Delhi in the fall.
Yes, I think most of the winter next year and the next spring so.
And they are planning to do some makeup.
Makeup cotwo and.
It's just taken a while to get there so yeah I think the capacity the.
EMEA LP would safely operate about $125 million of day, I think that they probably will not push it that much and and will probably top out somewhere in the 107 to 110, but it certainly will be making that making up some last time there.
Alright.
I appreciate the detail there.
2022, Capex you mentioned.
The range of $1 million to $5 million to $2.0 million and with the estimates I have that all <unk>.
Provide.
Very nice amount of very large and kind of free cash flow.
Yes, we agree with that and it's just a little tough to predict.
Tokyo gas the Barnett shale.
We don't anticipate the current operator spending much capex there however.
<unk> is the operator and theyre going through a sales process now we thought the that was the real upside out there with the new operator coming in there with the fresh look and and mostly focused on workovers.
And making some of these better potentially some re fracs and that sort of thing. So we have put a little bit of money and there, but we don't have anything specific but we're pretty excited about the upside there.
And I don't think theyre going to be standing up rigs or anything like that but.
But certainly <unk> returned to some conformance projects, we're seeing we're seeing some results of that now and.
And the Ham dome.
Little bit of ESP work to return of couple of those of the haven't returned so far so I think that number of season, one and $5 2 million for next year.
But yes, you're right and provide quite a bit of cash flow for share.
That was my very next question was Capex from the Barnett shale so.
Segued into that very nicely.
The Barnett shale.
Net nothing to do with finance or operations, but.
And the location.
Very convenient Eagle visit you can visit the properties and stay and Fort worth.
Well, it's just really nice to be in Texas, We love operating here, its oil and gas friendly and.
That's the.
That's the basin that is long and the tooth to have dealt with a lot of the regulatory problems as long ago. So we're buying the long tail, which which feels evolution ask and <unk>.
Getting back just the one more comment on your on your plenty of cash flow on top of the Capex. If you look at the best last six years.
This last doors of little little funky, but the pretty.
Pretty consistently we've been and the 11% to 12% of our income going back to.
The capex, which is significantly lower than most of our peers. Because we are focused on the excess cash flow. So I think that we're going to be a route and the same we are anticipating the same ballpark for.
The 2022.
You are a shareholder friendly intentions of never been and doubt with me.
Thank you.
And.
Alright, that's it that's all I have I'll pass it on.
And I appreciate it John Thanks for the note two we saw that I appreciate that.
Thank you. Your next question is coming from Richard Howard Your line is live.
Hi, Jason Great Great quarter, Great transaction have you thought about how youre going to.
Talk about Boyle.
Barrel barrels of oil equivalent and the future now that youre, bringing in gas and gas liquids.
Well Unfortunately, the I guess, we put out of a deck that the.
<unk>, how we think about it in terms of value because everything comes back to what is this going to contribute to our cash flow to be able to pay the dividend.
But the industry does the whole six to one because that's the British thermal unit breakdown.
<unk>.
I guess, we're still and we're still thinking about that or about the launch into a reworking the investor deck and probably go out on the road.
To start telling our story pretty aggressively the summer.
We thank our current shareholders like it quite a bit and we're pretty happy and have a good relationship with them.
We need to be able to expand out and get out there. So it's going to be important thing the of some thoughts on that rich.
Well I think it's an issue because I personally like the way you described it.
And the transaction, but it but it is not the way of the industry does it.
You may be forced to go the other way.
Well the reason the breakdown.
It's not an uncommon thing for us to have.
And Beth quite of bit of time on the education, we feel like we're very different oil company to start with.
Well companies are going to need to look like going in the future. The actual cash flow positive businesses. The return money to shareholders. So that's part of our story and I think.
Educating new investors on the value based the way we look at it.
And is really what they want anyway. So.
I think we'll probably have to do both and it's been quite of bit of time and as we do.
Building the relationship with investors right and getting it all right.
Yes no.
Jason and I think as you mentioned rates of the challenge is kind of the industry vernacular and when it comes to sort of reporting things on a on an equivalent basis and I think.
As we sort of talked to analysts and investors like yourself will obviously be mindful of that and thinking through how the correctly portray the business, especially from a from a cost standpoint, because as you know low for gas assets is a lot of lower on an equivalent basis and oil so.
Just need to be mindful and make sure that everyone gets the kind of the right spot as we as we talked about where we think the business is going.
Great. Okay. One other question so between the time of the effect of transaction January one and the closing.
There's about 128 days.
And in that time the properties generated about.
$4 million is that correct.
Well.
And I think it's probably going to be a little shy of that because we had the exclude a small amount of assets because of.
Dispute with a consent.
And if Tokyo gas can get that fixed we'd love to buy that as well, but I think youre thinking about it right you saw about a one four adjustments of the purchase price that we lifted is preliminary.
Youll have to remember that most non op people get paid excuse me a couple of months and arrears so sub.
Of the four months between the effective date of one one and the closing date of May seven.
I think we'd probably of accounted for a couple of those months so.
May not get to the $4 million, but certainly more than what we've recognized so far if that makes sense.
And also given that lag.
Haven't prices significantly increased effectively.
Right, so it would be and reasonable assumption without providing too much guidance that the March and April would be a little little more than what we saw in January and February so yes, okay.
<unk> too far off the four 4 million might be a little bit rich.
Okay. Thank you very welcoming of the weather go.
Go ahead.
That's it thank you.
Thanks Rich thank you.
Your next question is coming from Erik <unk>. Your line is live.
Hey, guys and congratulations on closing the acquisition and raising the dividend Thats Great news.
I was just wondering what can you give me a little more detail on what it was that didn't close the as part of the acquisition.
Sure.
And there was a.
And there's four of five fields that are involved here. So it's spread out over nine counties there as of <unk>.
Field called the alliance.
And that.
There were some piece of it that we're just working interest aligned with.
You had was some royalties and alliance field also some working interest and <unk> and alliance feel some of those working interests were subject to a lease that the.
The lease holder.
And disputed that it was the.
And so I'll give you I thought it was the prep and they thought it was the consent. So there.
Kind of disputing that and for US we felt like we just need to stay out of it so.
There are provisions and the PSA to account for that and we just manage the PSA and excluded those assets and closed on all the rest of it.
And I will say this Tokyo gas.
The Americas, and Tokyo gas burn and that just wonderful to work with and these are never easy and.
And we're very very pleased to work with those guys.
If they can get that resolved we'd be happy to buy the rest of it but.
And what it did it's mostly dry gas and Theres no liquid. So you didn't see the our liquid reserves or production affected at all and actually the percentage of NRI was actually a little higher because of what was left and the alliance was more of the royalties that of course don't have costs associated with them. So the proportion of that was left out was.
We're okay and we adjusted the price right.
Okay, great. Thank you very much that's all I had.
Thanks.
Thank you. Your next question is coming from John Bair Your line of life.
Thank you flow, Jason and Ryan.
Hey, John and John.
Couple of questions.
And your C O two cost appear to be heading up.
Not just perhaps in your and your.
The operations there but.
Kind of industry wide, so just kind of.
The question is there any have you given any consideration or is there any possibility of participating in the carbon capture program.
Mike.
Allow you to reduce.
The overall cost or even sourcing.
C O two I know, that's probably kind of early in the game here and then kind of sidecar with that question.
And there are any of the operators of these fields looking into utilizing green chemistry and for enhanced oil recovery or <unk>.
Maintenance of the.
Field.
Well.
A lot of silence there well.
Well.
It's obviously on our mind, we're focused on the ESG and kind of thinking about the future and what that means for our company.
There is about 30% of what and various putting downhole comes from industry. So that's already something that we're giving to participate in it.
It's not like we have a lot of control being in the non operated position out there of.
Going and getting Sidoti.
And and.
And not purchasing and COPD, but getting it from industry didn't already is already working with that we have.
Really developed a relationship with the barrier, where they've got a new.
South of regional VP, Kate Ryan we're excited to work with her and her team and kind of thinks about that entire region.
But.
Not a lot of direct things that we do that we can do there until we get into.
And operated position, etc day ever comes.
Okay, but so the operators aren't really talking about that are addressing that and I think they are I think it's the big commitment for them and I think youll see <unk> get into what they call blue of oil and a very big way.
Because of I guess gets blue oil the greener of oil or something of the carbon capture I think is going to be a big thing for us.
We haven't figured out of way to monetize that yet.
Yeah, that's right.
And it's all kind of perhaps early in the game right now in that regards but.
Certainly everybody can do that.
The announcement or suggestion by Exxon.
And recently about.
Putting that put together a huge program so.
Given that in your comments, you're saying that the Ham downs back to the profitability is there any.
Consideration of of.
Maybe additional wells or any workovers there that.
Mike.
Continue to improve overall production rates.
Yes potentially.
And I doubt on neutral new drilling, but workovers for sure those guys are really smart and they've worked with during this downtime of COVID-19.
And really focused on maximizing the field with the lowest amount of cost so theres going to be some costs are captured and I think and a more permanent way there.
Turned everything that just makes sense the turn back on.
There are some wells that havent been returned that they need.
And the ESP replacement and so we need to sort of justify the workover. So those workovers that we'll see over the next year, but.
No massive plans up there we're looking at a couple of other options when we got into Hampden and.
There were some larger pipeline scheduled to be up there and Magellan and tallgrass and putting in quite a bit more capacity some of thats changed a little bit and been delayed from the last year.
So we're looking at some options to get better pricing, but.
But so far the the WCS is really kind of stabilized and tighten the differentials and we're definitely enjoying that we expect that to continue.
Through the summer so that's been a pretty nice net back at this point.
Okay.
And one last quick question on the Barnett and your press release, you mentioned that the acreage had.
And potential for.
For new locations and so forth any any.
The discussion I mean, you said the not really expecting much increased capex.
That and in the near term but.
Is there any potential fresh locations that.
Could potentially.
The improved the overall production rates.
They are definitely and as we got to.
Couple of hundred locations that are mapped out.
I would say.
Probably less than 10% of them would be economic it.
Or attractive either economic but attractive and the way that somebody would go out there and stand up the rig and drilling.
Les and about $3 15, if we get gas and kind of of $3 $53 of 15 Center certainly a lot more become if we get to $3 50. So it kind of depends on how bullish you are oil and gas I mean, I think the potential there, particularly in the long term, we're not counting on any of it we certainly didn't pay for any of it but it's all held by.
And with no continuous drilling clauses. So it is there and of value for us and the future.
<unk>.
And the only caveat here if a new operator comes in and so we anticipate blackberry or being able to get a deal done.
And like I said before I think that most of the Capex is probably not going to be drilling new wells, but.
And probably theres all kinds of work here to do for to increase production and we're pretty excited about that but that's going to be more.
And this workover projects.
Projects are highly.
Our high return quick quick return back on your money Theyre, usually worked very well.
Okay.
Okay very good thank you for taking the questions and congratulations.
And that drove it and increase and take care.
Thanks.
Thank you once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone and at this time, please hold while we poll for questions.
Your next question is coming from Richard Howard Your line is live.
Jason One more question you reminded me that the Hamilton dome.
Hey.
The Western Canada select producer and the.
The last I saw those prices were over $50, a barrel, which I think.
And is actually better than when you made the transaction and if I got that wrong or all of them I know you've got that exactly right. The two I said, it's tightened a little bit and we're pretty happy with it yes. We've we've been net netting back about 52 I think of in April. It was 50, 50, 175, something like that and get back to us.
No.
With $30 lifting costs were at pretty good margin.
And like I said and done.
<unk>.
And it was kind of and incomplete last year, the boys of smart and and they kept us from losing money out there, but this last year just hadn't made a lot.
And.
And that thing still pays 12% to 15% of our dividend 10 years from now.
Shareholders, when the real happy with that field.
Yes, you got that right rich.
And on the subject of the of the cash situation do you anticipate that will build up of another.
The $15 million to $20 million of cash before we make the next transaction or.
And does that give them and your thoughts on that.
And certainly hope not we want to we want to put it to work.
And we're looking at several deals right now as I mentioned that there seems to be a stability right now that the people are playing.
Playing ball like the bid ask of it plagues our industry.
Seems to be in the position not non cases, but and.
And some of the where you can get some transactions so.
And we're working pretty hard to make a where we can.
That's that's difficult.
Not going to be.
And we're gonna be prudent whatever we do.
Right.
Yeah, a couple of things rich one.
Obviously, we basically have still and Undrawn credit facility. We drew just we do a little bit just for working capital purposes, but we had enough cash right to close kind of of the Tokyo gas acquisition and we expect this acquisition along with our base business at the Roth quite of bit of free cash flow here over the next few months. So if you take that combined with.
Effectively and Undrawn.
Borrowing base, we still feel like we have good liquidity and capacity to go out there and do another deal and as Jason said.
It's going to be have to be the right deal, but we still don't feel like we're certainly tapped out at this point.
That's great that's what I wanted to hear.
Get them.
Right.
Thanks for the questions rich, thanks, rich and take care.
Thank you there are no further questions in the queue. At this time I will now turn the floor back to Jason Brown for closing statements.
Well. Thank you everyone for your participation day, please feel free to contact us and any other questions I look forward to providing you with an update of our next conference call in September.
Thank you.