Q3 2021 Ring Energy Inc Earnings Call
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Good day and welcome to the ring Energy third quarter 2021 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then.
One on your Touchtone phone and to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. Al Petrie Investor Relations. Please go ahead Sir.
Thank you Chuck and good morning, everyone. We appreciate your interest in renewable energy well begin our call with comments from Paul Mckinney, Our chairman and CEO, who will provide an overview of key matters for the third quarter. We will then turn the call over to Travis Thomas <unk>, Chief Financial Officer, who will review our financial results. Paul will then return.
Turn to discuss our future plans and I would walk before we open the call for questions also joining us on the call today and available for Q&A.
During our Q&A session or Alex <unk> Executive Vice President of Engineering, and corporate strategy Marinos by Daddy Executive VP of operations and Steve Brooks Executive VP up land, they go human resources and marketing during.
During the Q&A session. We ask you to limit your questions to one and a follow up.
Welcome to reenter the queue later with additional questions I would also note that we posted a Q3 2021 earnings presentation to our website. This morning. During the course of this conference call. The company will be making forward looking statements within the meaning of federal Securities laws investors are cautioned that forward looking.
Statements are not guarantees of future performance and those actual results or developments may.
For materially from those projected in the forward looking statements and the company can give no assurance that such forward looking statements will prove to be correct.
<unk> disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise accordingly, you should not place undue reliance on forward looking statements.
These and other risks are described in yesterday's press release and in our filings with the SEC.
These documents can be found in the investors section of our website at Www ring energy Dotcom should one or more of these risks materialize or should underlying assumptions prove incorrect actual results may differ materially this.
This conference call also includes references to certain non-GAAP financial measures reconciliations of these non-GAAP financial measures to the most directly comparable measure under GAAP are contained in our earnings.
Now it's been released yesterday finally as a reminder, this conference is being recorded I would now like to turn the call over to Paul Mckinney, Chairman and CEO.
Yes.
Thank you al we appreciate everyone joining us today.
As you know our top priority coming into 2021 was to strengthen our balance sheet through debt reduction our strategy had been to capitalize on the organic opportunities within our portfolio to maintain our production and liquidity and focus on generating strong cash flows to further per day pay down debt.
We are pleased with our third quarter results as we once again generated free cash flow and strengthened our financial position by paying down debt, which in turn increase our liquidity.
Looking at our results in more detail, we generated adjusted EBITDA of $19 $7 million and $2 $6 million of free cash flow during the third quarter, while paying down $5 $5 million of bank debt.
We ended the third quarter with approximately 56 million of liquidity, a 9% increase from the end of the second quarter.
During the third quarter of 2021, we sold 758387 barrels of oil equivalent or 8243 barrels of oil equivalent per day, which was 4% lower than this year's second quarter sales of 792551 barrels of oil equivalent.
Our 8709 barrels of oil equivalent per day.
Impacting third quarter sales volumes were certain events, including new well completion activities of the company and an offset operator that temporarily reduced production from a number of our higher producing wells I am happy to report that the production from these wells has since recovered to normal levels. Additionally, the company continued to experience.
Lower than anticipated natural gas sales due to certain third party processing facilities capacity.
Past any constraints.
Both the central basin platform, the northwest shelf areas in the northwest shelf. The plant restrictions also reduced all sales due to higher pressures. Finally, many of the Ctr is completed during the third quarter resulted in longer than anticipated downtime, while the horizontal sections of the wells were being cleaned out.
We performed 10-C T ours, including seven in northwest shelf and three in the Central Basin platform year to date September 30th we had performed a total of 24, ctr's, including 18 and northwest shelf and six in the Central Basin platform.
Offsetting the impact of lower sales volumes was higher third quarter prices for both crude oil and natural gas that contributed to an overall, 3% increase in revenues over the second quarter.
A key highlight of this year's third quarter was the continued success of our 2021 drilling programs as shared in the past we have aimed in 2021 to invest in only our highest rate of return drilling opportunities. Our programs have been designed to not only mitigate production declines but to maximize cash flow as well.
During the third quarter the production from our phase III drilling program contributed very little to third quarter production volumes, which should allow us to capitalize on the currently strong commodity prices during the fourth quarter, perhaps more importantly, though and assuming these strong commodity prices continue the production from our phase three.
Phase four drilling programs should significantly increase revenue and earnings early next year as the majority of our lower priced hedges roll off.
With respect to what we accomplished during the third quarter, we utilized two rigs to successfully execute our phase III drilling program of four wells, including two.
One mile lateral wells in north West shelf, and 215 mile lateral wells in the Central Basin platform with all four wells at a 100% working interest.
Consistent.
With the success of our phase one and phase two programs in the first half of this year all of the phase III wells were drilled and completed on schedule and within budget as I indicated earlier. The wells were placed online late in the third quarter between September 9th in September 18th So the production from these wells had a very minor impact on.
Third quarter sales volumes. However, we have been very pleased with the production results from these wells to date since they are meeting or exceeding our pre drill expectations.
SaaS of our 2021 drilling programs and the continued improvement in crude oil prices encourage that to commence our phase four drilling program of two wells, including one.
One mile lateral in the northwest shelf area with approximately a 75% working interest and a one and a half mile lateral well in the central basin platform with 100% working interest the northwest shelf one mile laterals was placed on production.
At the end of October and is currently exceeding expectations. The central basin platform, one and a half mile lateral well was successfully drilled in October and is awaiting completion and is expected to be placed on production before year end.
While the production from these wells have not will not have a big impact on our 2021 production. It should provide a nice increase as we enter 2022 with that I will turn the call over to Tom Travis Thomas to discuss our financials in more detail I will then come back and make a few closing comments Travis. Thanks.
<unk> for the third quarter of 2021, we generated revenue of $49 4 million and net income of $14 2 million for <unk> 12 per diluted share.
Excluding the estimated after tax impact of pre tax items, including $8 $2 million noncash unrealized gain on hedges and approximately 800000 for share based compensation expense. Our adjusted net income was $6 $8 million or <unk> <unk> per share.
During the third quarter of 2021, we had approximately $16 $3 million in cash flow from operations and $13 7 million in capital expenditures. The combined result was positive free cash flow of $2 $6 million.
For the three months ended September 30th 2021 we had oil sales of 659247 barrel and natural gas sales of 594841 Mcf for a total of 758387 Boe.
Our third quarter of 2021 realized pricing was $69 61 per barrel of oil and $5 86 per Mcf of natural gas for an average of $65 11 per Boe.
The differential between our average oil price received and the Nymex steady Ti was a negative $1 $5 five per barrel for the third quarter of 2021 versus our second quarter average differential of negative <unk> 99 per barrel, our average natural gas differential from Henry hub was a positive positive dollar.
<unk> three per Mcf for the third quarter versus the second quarter positive differential dollars seven per Mcf.
For more detailed discussions of our financials and other income statement line items. Please refer to our earnings release and 10-Q as filed with the SEC yesterday of course I'll be happy to answer any questions. You may have during today's Q&A session.
As Paul discussed during the third quarter, we were pleased to report another period in which we generated free cash flow further pay down debt and increased our liquidity position.
We'll continue to use much of our free cash flow to reduce our debt position with the level of free cash flow and cadence of debt pay down primarily driven by the timing of capital spending and market conditions.
As of September 30th 2021, we had $295 million drawn on our revolving line of credit and liquidity at $56 $2 million, including $2 million in cash and $54 2 million available on our revolver, which included a reduction of 800000 for letters of credit.
We paid down our revolver by $5 $5 million in the third quarter and a total of $18 million in the first nine months of 2021.
Turning to our outlook for the remainder of the year.
We expect fourth quarter sales of 8800 to 9200 Boe's per day, including 7500 to 7900 barrels of oil per day.
As mentioned in the release, our estimated company net production in October average over 9000 BOE per day with the addition of two phase four wells coming online in the fourth quarter.
We are positioning ourselves to capitalize on what we expect the continued strong oil price environment in 2022.
Keep in mind that we had been essentially fully hedged at lower prices for most of 2021. However, based on our current contracts in place starting January one 2022, our hedge volumes will drop to 3129 barrels per day.
We anticipate an average lifting cost for the fourth quarter of 2021 of $10 50 to $11 50 per BOE lifting costs include lease operating expenses and gathering transportation and processing costs.
Turning to our fourth quarter 2021 capital investment program.
We expect total capital spending between 11% to $15 million with all expenditures funded by cash on hand, and cash from operations. In addition to company directed drilling completion activities for the two well phase four program our capital spending outlook includes targeted well reactivation workovers infrastructure upgrades.
Continuing our successful Ctr program, and northwest shelf and Central basin platform areas.
Also included as anticipated spending for lease cost contractual drilling obligations and non operated drilling and completion and capital Workovers.
And the updated Investor presentation will provide a breakout of capital spending.
Our third and fourth quarter 2021 capital program was designed to place us in a stronger position as we enter 2022.
Regarding our future hedging activities. We believe it is important to protect our future cash flows capital spending program and ability to pay down debt. However, we also want to participate in what we believe will be a rising price environment to the fullest extent possible.
We look forward to sharing the details as we execute our opportunistic hedging strategy.
With that I'll turn it back to Paul.
Thank you Travis.
In 2021, we executed on a number of initiatives that put in place new processes designed to improve how we evaluate the technical operational financial and administrative aspects of our business. We hope that you are as pleased as we are with the progress we have made and look forward to further improvements in 2022 and beyond.
A clear example of our success has been our targeted drilling program for 2021, and our ongoing efforts to drive increased operational efficiencies and our pursuit of reducing costs and meaningfully strengthening our financial and market position.
We are doing this by remaining squarely focus on generating free cash flow and.
And improving our debt to EBITDA metrics.
We can do this through continued debt reduction as well as growing our EBITDA. Another key focus for our company as a pursuit of strategic acquisitions and we are active in the marketplace screening opportunities that we believe could make long term sense for our stockholders.
As we have discussed in the past any potential acquisition using equity must bring in sufficient production revenue and cash flow to improve our leverage ratio and the transaction metrics will need to be accretive to our existing stockholders.
As you recall, we launched a sales process during the second quarter of 2021 to sell our Delaware assets.
Had hoped by now we would've been able to share with you. The terms of the sale of those assets, but that sales process is still underway. We continue to be in discussions with several interested parties and we'll provide further updates as definitive information is known.
Before I wrap up this call and turn it over for questions I'd like to share.
What we are doing with respect to ESG, we are putting the final touches on our initial sustainability report, which we look forward to publishing before year end.
With respect to 2022, we are actively working on our capital budget for next year and although our board of directors has not approve these plans we intend to maintain a single rig working for most of the year. The opportunities we have in the northwest shelf and Central basin platform should lead to meaningful production growth and allowing.
As to take advantage of the stronger commodity prices increase revenue and earnings and improve our balance sheet. In closing. We believe these are very exciting times a ring.
Steps, we have taken over the last 12 months position us very well for 2022, and we look forward to sharing our drilling plans for the next year in the coming months. We appreciate the continued support from our stockholders and look forward to keeping everyone appraised of our ongoing progress and with that I will turn it back over to Chuck for questions.
Thank you we will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
Your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
And the first question will come from Jeffrey Campbell with Allianz Global Partners. Please go ahead.
Hi, good morning.
Hey, good morning Jess.
There was upside based upon positive results from year to phase two.
Our phase III excuse me Central basin platform wells.
And these are the first new wells were drilled in the area in two years.
Can you quantify the elements contributing to this upside I think some color it would be interesting.
You know I'm going to turn that over to.
Marinos Baghdad to answer that question, but I got to tell you. We are very pleased with the results of all four of our wells there.
They're all doing very well so Mario do you want to answer the question specifically about the central basin platform sure.
We.
We have not drilled a well there in 2019 as you mentioned, Jeff and since 2019 and with these two wells and the results. We're seeing we've made a few changes to the completion practices a few tweaks to completion.
The completion of the wells and based on the results and current oil pricing. We're encouraged that we'll be able to continue drilling in this area.
In the coming years.
I think it does.
I'll just add that you know.
When we first evaluated what had been done in the past.
Quickly came to realize that a lot of the drilling in the central basin platform is very geologically base and so we put a lot of time into evaluating the geology and the locations that we picked and then at the same time, we did a complete review of all of the completion technology like Marino.
<unk> and we decided to make some tweaks in the results of that had been very positive and so.
What youre going to find going into next year is that we have a handful of wells, we're going to continue drilling down.
Down and they're applying what we've learned this year and hopefully.
Continuing to improve the results, but right now we're very happy with the results in there and they're very very strong economically.
This is Alex I'd like to add one more thing.
The thing that's contributing to the success of the CVP will support Assembly gone back and Geo steered all the wells prior and we're really focused on the landing zone set to another key contributor to our success. So far in the CVP. So we're very optimistic of what the future holds there.
Okay that was very helpful. It sounds like when we kind of pull all that together, it's better targeting better drilling better completion.
Apple you noted.
You noted that two rigs were released after the phase III program.
Was there one rig involved in phase four has been released and if so when do you anticipate resumption of drilling.
Yeah, we actually.
<unk> drilled each of the world with a different rig both rigs have been released.
And that was due to several.
Issues I guess.
Issues may not be the right way of saying that but I think it was a top drive issue wasn't that we were originally going to do it with one rig, but we decided to pick up another rig because of the challenges we had with the top drive on the first well drilled.
Okay.
Do you have any idea of when youre going to reverse.
Assume youre not actively drilling.
When you're going to resume drilling.
Correct. We finished drilling the CPP will on October 17th when we released the rig and where.
We haven't we have actually two rigs that were evaluating now for our 2022 program.
And if we need to decide to drill any more wells towards the end of this year.
We will be able to pick that rig up one of those two rigs up there. They are available and we feel comfortable with the rig situation as it stands today.
One of the things that is the.
Impacting our plans just to let you know and there's a little bit more color than perhaps you asked for but.
Sourcing all the materials to drill our wells as an issue where sand supply chain.
Issues affect our drilling program and so before we pick up a rig we're trying to ensure that we will not have delays associated.
Associated with those type of problems and so we're we're procuring.
We can prior to picking up the rig and once we get it going we hope to keep it going for the rest of the year.
Are most of the restaurant that was yes that was very helpful. I appreciate that extra insight I'll get back in the queue. Thanks.
Thank you Jeff.
The next question will come from Neal Dingmann with terrific Securities. Please go ahead.
Okay.
My question is when you guys spin.
On bolt obviously.
On the rig side.
<unk> I'm wondering when you look.
For next year, but.
To say it again.
Yes.
Planned potentially sold one.
Maintenance capital program.
I know you guys finally free cash flow focus did a good job paying down debt.
And I'm just wondering.
Around that do you think the best way to do that when you and your team look at it.
Yes.
It's purely just the maintenance capital light activity.
Others are doing we're getting returns.
Thanks.
So again I'm not looking for specific guidance for next year.
Okay.
No Neil that's a really good question and this brings us back to the questions that we've received in past calls.
And I've stated, we're going to still continue with this strategy as we improve our leverage metrics, we're going to slowly change the allocation of that capital more towards growth and so.
I think what you can see that.
The big issue for US I mean, if you look beyond this quarter next year at the end of at the beginning of the next year the majority of our lower priced hedges roll off.
We're position ourselves not only with the capital spending in the last part of this year to increase our production. So we've kind of springboard into the next year.
Really ramp up the revenue and cash flow and so and because of our metrics are improving with that additional EBITDA, we will allocate more money towards growth until next year is not going to be an abrupt change is going to be a gradual change, but we're going to gradually start putting our foot down on the pedal so to speak to increase growth.
And then the thought.
Thoughts I know you've been pretty well hedged into next year your thoughts on.
Just kind of planning for next year I know some guys.
Redone hedges, a little bit take advantage of it.
Thank you.
Just thoughts.
Mike.
Well like like Travis mentioned.
In his portion of the call.
We're going to have a little over.
<unk> thousand 100 barrels a day of <unk>.
Lower priced hedges that will carry into next year.
Right now.
It's our belief anyway that our shareholders are investing is because they they really do believe in the upside in energy prices and so we are going to try to structure our.
Defensive position so that we can take advantage full advantage of the prices as we go forward into next year and so our hedging strategy right. Now is clearly focus we will always have a hedging strategy that puts in.
The protections necessary. So we can continue to pay down debt. So we can protect our capital program, but we're going to structure. It such that we can take full advantage of the prices.
As they as they continue to.
<unk> strong.
Thanks.
Yes. Thank you and your next question will come from Noel Parks with Tuohy Brothers. Please go ahead.
Hey, good morning.
No.
Alright.
I apologize.
You touched on this I think you did.
But could you just go over.
Again, a bit about the G&A trend.
<unk>.
In the quarter up sequentially from the last call.
Okay.
It's also going to be.
Aggregate <unk> also.
Just slightly over the last three quarters.
So Jonathan on that.
Thanks.
Yes sure.
Well, yes G&A trend.
One of the things that I've done when I came on board, we came in with a pretty skinny is gas.
We're doing our best to keep G&A low.
But we have started doing that our engineering our land our operations.
And financial groups with the appropriate head count so to speak to manage the business and so here there's less.
The recent past we've hired a few more people so youre going to see a slight increase in the G&A, but with respect to LOE.
We still have several initiatives.
The benefit of our Ctr program.
Doesn't occur all at once but collectively we are seeing really good progress on lowering our LOE now that is in the face of <unk>.
Rising costs and prices that we're seeing as a result of the supply chain issues and as we're seeing with respect to inflation I've been kind of surprised when I read.
Non oilfield related information associated with the inflation rates that were incurring I think Youre reason, we saw something that is more indicative of what were actually realizing in the field because prices are really up I mean, especially with respect to steel now these price increases effective cementing and all the other services that we.
Utilize as we repair all wells and maintain our wells and so operating costs are just going up.
So.
But we'll see how that goes because we still believe we have additional initiatives to continue to reduce costs those cost reductions, though are going to be offset by and whether it's partially or fully we will have to wait and see but we're seeing some significant increases out in the field right now associated with inflation and supply chain.
Yeah.
Great. Thanks for the explanation.
It's one thing to just talk on the M&A front.
Just curious to hear about may.
Maybe what.
Potential buyers with the Delaware Basin Earthshaking I'm, just wondering yes.
Sort of like the <unk>.
Higher process.
Their access to financing.
Among the things start slowing the process down and then if you could extend that out broadly exist maybe talk on on.
The seller side of M&A.
In the region.
Yeah, what's the psychology of these days.
Bid ask spread.
That's the issue.
Being higher but somewhat.
Our stable trading range of crude prices for it.
Okay, Yes.
Do you ever again, so with respect to the Delaware.
We continue to have strong interest.
The size and the time, if we own the deep rights. This stuff would have been sold a lot quicker.
But what we're finding is that.
Yeah.
The real challenge that from our perspective it appears to be.
The interested parties with buying our property appear to have challenges.
Securing or getting the financing necessary to actually get this thing across the finish line. If you remember what happened to US last year, we just didn't want to enter into another transaction sign a purchase and sale agreement with someone who can't get the financing. So we spent quite a bit of time.
Working with the.
The potential buyers here.
And trying to flush out.
With a much higher level of certainty there are financing positions in what we'll find is that they're getting they're having difficulty getting their financing across the table. So the banks are they.
The finance serves.
Assets in this size I guess, a smaller size.
They appear to be a little bit more challenging to get something over the finish line and then the larger banks dealing with larger transactions and Thats our observation right now and so we're still working with folks, but the one thing we don't want to do is repeat the.
What we encountered last year now with respect to the spread in the difference between what we're seeing out there in terms of what buyers and sellers.
There's always a gap there, but I believe youre seeing transactions occur.
Some of the deals that we have.
Participated in but were unsuccessful.
We know that we were in.
In the right Zip code.
Yes.
The Big Challenge and I've said this in the past our challenge has been our balance sheet.
And I have made any.
About it I mean, the balance sheet is doing the way in and so we said that we wanted to.
No trend backed.
With an acquisition in a way that also improves our balance sheet, so improved our leverage ratio and to do that we would need to use.
Equity and so the other part of our strategy and my commitment to my shareholders want to make sure that if we did something.
A transaction.
And then on the tail end of that transaction.
My existing shareholders.
Have an accretive benefit associated with cash flow of barrels and barrels of production per share and all that and so.
If we had the cash we would have been successful probably already this year and so most people look at equity and they want a disproportionate amount of equity in and I'm not going to lose side of the strategy that I've laid out for my shareholders, but I think my shareholder support that but I'm not going to forget the fact that I promise my existing shareholders.
We do will be accretive otherwise, we won't do one because we have the organic ability to continue to pay down debt and strengthen our balance sheet with the assets that we have I would like to accelerate that but I'm not going to do it in a way that causes us to compromise on strategy, we've laid out for our shareholders.
Great. Thanks, a lot.
The next question will come from John White with Roth Capital. Please go ahead.
Good morning, everybody and good morning, John.
Yeah, well, thanks for that detail commentary.
Commentary on the Delaware.
That sale you were very Frank and I appreciate it.
Switching to the topic of you, making an acquisition.
I think everybody is aware there is.
Probably more private companies in the horizontal San Andres and there are public company. So.
I would guess that gives you a lot of targets to work on.
And I'm wondering are you looking at opportunities outside of the horizontal San Andres play and in other parts of the Permian Basin.
And.
Yes, we are we do like the financials horizontal oil play and we're also looking at opportunities to acquire more interest in that play.
But as you know that play also extends down into the Central basin platform, where we've drilled a couple of wells already this year and are very successful.
But we really like the central basin platform area in the southern part of the North West shelf, primarily because we operate there we've got a really strong operating team and I'd love to be able to spread the cost of.
That team over more wells and more more barrels of production.
To capture those synergies.
But we have also seen some other opportunities outside of that area that are very appealing and so.
But my primary pursuit is finding opportunities that generate the returns that I know that are competitive and comparable to the ones that I have in house I, just don't want to dilute.
My existing portfolio of properties.
By buying properties that have super high operating costs or don't have the same type of economics, because I won't allocate capital to them and so I'm trying to keep a really good and attractive portfolio of high margin low decline.
And profitable assets, we like where we are we're going to continue to focus there, but there are other assets that are just slightly outside of the central basin platform and the southern shelf and that are appealing as well.
Can't promise you one way or another but we are focusing primarily in the Permian basin.
We haven't really had evaluated anything outside of the Permian basin right now, but there are some opportunities even outside of there.
But I think we're going to continue to focus on the Permian basin differently, because we we know it we're working there we're very effective and cost effective there.
That answer your question John.
Yes.
For that and I appreciate the detail and good luck on the fourth quarter drilling effort.
Thank you.
Again, if you have a question. Please press Star then one our next question will come from Jeffrey Campbell with Allianz Global Partners. Please go ahead.
Hi, Thanks for taking my additional questions I've got two more.
My first one is does your fourth quarter 'twenty one guidance.
<unk> continued struggles with the third party processing to recover nameplate capacity.
Whats your forward view on this issue going into 2022.
Yeah, I'm going to partially answer that but I'm going to turn it over to marine as well, yes, we struggle with what's going on.
Primarily in the Central Basin platform.
The operator of those facilities continues to tell us that theyre going to have things up and running we will be up and run for a few days or maybe five days or a week and then all of a sudden we're down again and so we're really struggling with and I don't think we're the only operator I think most of the operators out there in the central basin platform that seller.
Solar gas with this particular gathering system have struggle with the same issues and so on.
I'm tired of making promises as a win that's going to come online.
We began this year and the original guidance, we had we assume that after the winter storm that all of that would be restored it turned out that a lot of that equipment was older rotating equipment that was.
It was challenging to repair and has proven to be that way to this de Maria is there any more color you want to add to that.
Well actually yes, there's a couple of things we are working discussion with other parties alternatives for taking all gas.
Certain areas and in addition to that we are.
We're making efforts we've been installing compression in sort of areas that have allowed us to increase our gas sales quite a bit and we're going to continue to do that kind of mitigate the problem.
I will get through this.
Okay that was that was helpful. I wanted to start.
One part of it again.
D is anticipation of continued struggles there already anticipated in the guidance you provided for the fourth quarter.
Yes, they are.
Okay, great. Thank you.
And my last question was.
Do you have any particular expectations regarding your ongoing next bank redetermination.
Well, we're in the final phases of that we're pleased with how that is turning out.
I don't really I hate to go online.
Before.
The banks actually hold their boat and make their final decisions, but right.
Right now things look very favorable I think part of what you saw when you go back to the spring Redetermination the banks did.
It did not have any further requirements for hedging.
It appears that that's the direction, we're going here again.
And so liquidity is strong and I anticipate that it will at least stay the same but it is.
I'd like to add one thing this is Alex science on the RVO the price decks have come out and they are higher than the spring. That's why we're working with our banks to fully.
Finish the rig termination and should be out hopefully in the next month or so.
No I think that was helpful. I appreciate it and again congratulations on the quarter.
Alright, Thank you very much where we're really excited about the quarter I know the production was lower than we had anticipated, but if you look at how we position. This company for next year. We're looking at a really strong first quarter as we springboard out of out of the fourth quarter of this year.
As there are no further questions. This concludes our question and answer session I would like to turn the conference back over to Mr. Paul Mckinney, Chairman and CEO for any closing remarks. Please go ahead.
Yes. Thank you everybody for joining us today I'd like to remind you that we have a special.
Stockholders' meeting coming up next week, and so we look forward to everybody voting so.
With that I'll end this meeting and thank you again for your interest and support and ring energy.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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