Q3 2021 Highpeak Energy Inc Earnings Call
Good day, and thank you for standing by and welcome to the high peak energy 2021 third quarter earnings call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
They ask a question during the session you will need to press star one on your telephone.
You're acquiring deferred assistance, please press star zero.
I would now like to hand, the conference over to your first speaker today, Steven Cohen, Chief Financial Officer, you May begin Sir.
Good morning, everyone and welcome to high peak Energy's third quarter 2021 conference call representing.
Representing high peak today are chairman and CEO, Jack Hightower, President, Michael how us and Vice President of business development, Ryan High Tower, and I am Stephen toll and the Chief Financial Officer.
During today's call, we will make reference to our November investor presentation, and in our third quarter 2021 earnings release, which can be found on high peaks website.
Today's call participants may make certain forward looking statements relating to the company's financial condition.
<unk> of operations expectations plans goals assumptions and future performance.
Please refer to the cautionary information regarding forward looking statements and related risks and the company's SEC filings, including the fact that actual results may differ materially from our expectations due to a variety of reasons many of which are beyond our control.
We will also.
Also refer to certain non-GAAP financial measures on today's call. So please see the reconciliations in the earnings release, which was issued on Monday afternoon.
Our prepared remarks will begin on slide four of our November investor presentation.
I will now turn the call over to our chairman and CEO Jack Hightower.
Thank you very much for the introduction and I want to welcome everybody to our third quarter conference call.
And basically.
But this is a very exciting report we have for you. We know that you have your press release and can look at financial numbers and as we had mentioned earlier, we have lumpy production. So therefore, our financials are not as exciting, but when you look at our production.
This is a significant growth story for 2022.
We entered our second rig early in the third quarter.
We're focused on drilling marjan field pads and are flat top operating area.
And then as we mentioned in our August call. We expected that this would cause our production volumes in the third quarter to be lumpy, because we had to temporarily curtail some of our producing wells.
I'll go into that in more detail throughout the presentation.
Now that that's behind us our production volumes.
Getting our wells back online and getting new wells starting to produce we've rebounded nicely and since the beginning of October we've been averaging approximately 15500 barrels of oil.
Which is almost an 80% increase over and above.
Our production in the third quarter.
And.
That is a tremendous increase in production. It shows you the benefit of having a whole.
Production go back come back online successfully.
And then how much success, we're having in adding our new wells.
And it's important to note that these production levels are a product of our initial one rig development program.
So.
Wells that are drilled with our second rig will begin to contribute meaningful production volumes in early 'twenty two.
And then we're going to in addition, due to our excellent well economics and current strength of the commodity market, where we've added a third rig in late October.
And now plan to add the four year and another rig for thread.
We will want we will continue to pull our present value forward for our investors and yet we will do all this while maintaining our philosophy of staying less than one time.
Net to EBITDA. So we have we will go through the financials and talk about that as we go forward now if youll turn to <unk>.
Slide four.
On your presentation.
And it's really interesting I think to look at Howard County is the faded white line.
And all of the activity in Howard County, but when you see our acreage block our two contiguous acreage blocks and what we've added to signal peak from the last conference call and what we have up and flat top now.
Tremendous acreage position in.
In the quarter, we average 8200 barrels a day compared to 8900 barrels a day in the first quarter and we of course told everybody that our production will be all we literally had between four and 6000 barrels a day shut in during this period to frac any wells and but.
Since mid October we've averaged 15500 barrels a day, we've increased our acreage position up to 62000 acres and we still operate 92%.
Our acreage position.
Significantly close 10600 additional acres during the quarter.
This gave us almost a 100 or more additional locations. So when you look at us as a whole and even with four rigs drilling we're going to have plenty of inventory plenty of goes forward value in our production increases that we'll talk about later, we're going to continue increasing throughout 2023.
And beyond.
We also have still the highest cash operating margins of any of our peers, a 51% and an average realized price of $63 18 through the quarter.
On page five the next slide.
<unk> is the most exciting slide one of the most that we have at least through this quarter.
And it gives you an explanation of when we started getting to 33 to 3300 barrels a day and then we had the COVID-19 that was during that period than in a short period of time.
We had the winter storm Yuri that took our production off who we increase from that up to 5300 barrels a day in the first quarter.
When we started back.
With our program and our production started taking off and of course, then we had the offset fracking, where we had to shut in each of those categories have inhibited our growth during the period and then all of a sudden we get our wells back online and look at our production taking off in the third quarter.
Our beyond the third quarter into the fourth quarter and throughout the end of the year just going straight up.
That's significant and that's with one rig and Thats significant because we're growing our production extra digitally we're adding the second the third and the fourth rig before year end and that growth is going to continue on into 2000.
'twenty two.
Turning to next page.
Getting to slide number six.
We continue to receive great prices for our production our realized price of 63, 18 is 89% of WTS thats higher than any of our peers in the industry.
Even with our hedges in place.
I'll point out we have a lot in later on.
We had a lot of hedges that are.
Very small amount of our production is hedged and we have plenty of exposure to <unk>.
Price increases.
With oil prices going up.
Our capex in the third quarter was $64 million, excluding acquisitions, we drilled over 124400 feet of lateral.
Not including our second.
Horizontal <unk> well. So we now have two horizontal <unk> wells, we think they are the only two in the United States and they are very sufficiently handling our water disposal needs up and flat top.
As mentioned in our call.
<unk>.
This quarter is really the stepping stone for growth as we go forward now if you turn to slide six and looking at that we mentioned that in our press release.
The earnings were down from 40 million to $33 million, principally because of having our wells offline.
Our Capex, we mentioned what we were doing there our realized pricing is still fantastic compared to our peers. Our production is starting to come back up again, and so I wouldn't pay too much attention to this in the sense of we knew this was going to happen. We knew we had to take these wells on.
When you take wells offline your Hello goes up your G&A cost per barrel goes up.
All of these things will go right back into very efficient and being number one in our class as we exit the year in this quarter and now I'm going to turn it over to my colleagues to discuss the operations and the margins in some of the next few slides.
Thanks, Jack I'd like to start by congratulating our team on maintaining our peer leading cost levels. In spite of recent industry wide inflationary pressures.
This is a statement to their cost focus attention to detail and the measures they have implemented to keep our costs stable in this current environment.
We've made great progress on our key objectives of operating and capital efficiency and have maintained our impeccable safety record while rapidly increasing our production. If you turn now to slide seven.
Our 2021 margins driven by our low cost high oil cuts continued to be purely <unk>.
Both on a hedged and unhedged basis as.
As shown by the benchmarking graph comparing high peak to our Permian peer group.
These margins will continue to grow differentially to our peer group in 2022, as we drive down LOE and G&A cost.
On the chart on the right of the slide our low rent in third quarter ran a little hot.
This is a transitory situation, we foresaw this and began the necessary corrective steps last year.
The bulk of that transitory operating costs were related to three factors first our overall lower production in the third quarter due to curtailing material production for offset completion operations.
Had roughly 10% less Boe.
To spread the call silver.
Second cost incurred as several new wells turned online, but prior to their production ramp up.
And lastly, our current rental generator usage until our new high peak substation is commissioned in the second quarter of 2022.
This substation project remains on schedule. Despite the current worldwide supply chain bottlenecks.
Generator rental and fuel cost.
Up roughly $2 50 per Boe of this quarter's transitory change.
But even this change will trend down towards the second quarter of 2022 as production continues to ramp until it continued until it goes completely away in may when we energize our system.
This field wide electrification project, we will substantially reduce our operating cost in 2022 and beyond.
But we will also dramatically advance our ESG objectives, if you turn to slide eight.
In flat top.
Map on the left hand side of the slide as you can see.
Our third quarter activity was focused on multi well pad development on infield locations, which was a driver to our curtailed volumes in the third quarter.
We have transitioned into full manufacturing mode and flat to up.
Where we will focus 100% on multi well pad development going forward.
We have successfully delineated both the wolfcamp, a and the lower sprayberry across our entire acreage position as evidenced by our very robust well results in both of our key formations on all sides of our block and look for high peak to methodically develop other benches in 2022.
In signal peak the map on the right hand side of the slide.
In the fourth quarter, we will utilize our third rig to begin initial pad development across our acreage block.
We are currently drilling a wolfcamp, a and lower sprayberry pad and.
And we will continue the delineation of the Wolfcamp D formation based on the strong well results from our successful Wolfcamp D well.
As well as the excellent results from all sit wells in the area.
We can't stress all excited we are with the additional acreage we added in the third quarter as well as the well results to date.
And standing up a third rig in our signal peak area.
If you turn now to slide nine.
Sure.
Our team continues to be laser focused on cost saving initiatives as shown by our third quarter results, which remained flat with our prior quarters in spite of recent inflationary pressures.
We are striving to keep our costs flat, even as we accelerate our development plans by increasing rig count.
We're in the process of implementing additional measures, which will offset inflationary pressures and will help lower cost further.
Recycling, a higher percentage of produced fluids.
This is a benefit to capital cost as well as operational cost.
On our current pad that we're fracking today, we're averaging 60% recycled fluid.
And a pump many stages at 100% recycled.
We've also averaged 60% of our entire stimulation fluid for the third quarter was recycled produced fluids.
Our local sand mine project will be operational by the second quarter of 2022 and will reduce overall completion cost and advance our ESG initiatives by reducing emissions associated with trucking.
Our third quarter activity was focused in flattop, we're well economics continue to be fantastic. These.
These economics are a product of great reservoir performance.
Low cost and capital efficiency of our longer wells.
High oil cuts.
And our differentiated realized pricing these drive phenomenal results, a 12500 foot wolfcamp, a well at $80 oil pays out in less than six months from first production.
And generates an NPV 10 of $20 million a well.
In the lower Sprayberry is no slouch coming in at $18 million of NPV per well.
These economics are tier one in any one's portfolio.
If you turn now to slide 10.
Our team is hyper engaged with keeping ESG initiatives metrics safety and the continued build out of the necessary infrastructure in the forefront of all of our daily decisions.
We don't view ESG is something we need to implement its merely the result of doing the right things.
Hi peak again utilize significant recycled produced fluids and our third quarter, we recycled over 2 million barrels during this quarter, which equated to approximately 60% of our entire stimulation fluid needs.
We were able to utilize again over 100 are several zones were completed with 100% of produced fluid in the third quarter.
And our high peak substation project continues to remain on time with an expected online date in the second quarter of 2022.
This will reduce the need for generators greatly reducing costs and emissions and.
And give us the ability to run our rigs all timeline power in the second half of 2022.
We also signed an agreement for a 13 megawatt solar farm.
Again coming online in the second quarter of 2022.
During the daylight hours high peak will be using solar power to drill and operate our wells.
We've had zero recordable safety incidents.
And continue to provide our employees with flexible work environment in this post Covid World. It is a testament to high peaks experienced team and ingenuity that we've had the success that we've had to date as we continue to advance our ESG goals, while rapidly growing our activity and production.
And with my comments now complete I will turn the call back over to Jack.
Thanks, Mike and <unk> turn to slide 11.
In their presentation.
This is probably the most exciting slide and tells the story of high peak in 2022.
If you look on the left side and you look at the.
The curve that we had at the end of the third quarter at the bar that go straight up and then we takeover starting at the beginning of 2022 in the first quarter and see the incline. So youre almost straight up on your production with a four rig outlook.
We try to be.
Like to under promise and over perform and our presentations and what our projections are for the year and what our outlook is.
But relative to our outlook, we're averaging almost 28000 to 29000 barrels a day next year.
We plan to exit at between 36, and 42000 <unk>, we feel like that's a conservative estimate, but you can see and would that kind of growth with four rigs running.
With approximately $650 million budget.
It's been approved by our board of directors.
We feel like we can exit the year with an EBIT down our EBITDAX of almost 600 million plus a year.
That's tremendous growth we know the last.
Three weeks or so of our months has been great for our shareholders.
<unk>, a 50% gain for Mark.
$25 million, we raised in our offering.
This is really the story.
Everybody has to make their own decisions, but when you look at this and you look at our reservoir and you look at the performance we have the capsule efficient C. We have with the team that we have in place.
Our total overall return on investment with our differentials on oil pricing.
Oil prices stay the same our company is going to grow tremendously with our four rigs next year.
The next slide 12.
Also combines with growing production volumes, but also growing our reserves because as we grow our production volumes. We also grow our.
Sure.
Our reserves are pullets are.
Our proved undeveloped locations.
<unk>.
We will be adding additional reserves as we drill these wells and one thing I'd point out on this slide is.
Some of our growth is because of price increases, but most of our growth is because of drilling our wells, we've actually drilled now.
And operate almost 62 wells.
But only 33 of those wells contribute to our increasing $300 million of PDP and these are only PDP values here.
Do have some PD ANP and some of the numbers, but on our growth profile. It only includes our proved developed producing and that's at $723 million at the end of the third quarter. We have almost 14 additional wells that will be coming online.
The fourth quarter to be added to that and that takes us in excess of 850 to a $1 billion.
PDP reserves going forward into next year's business.
So by adding 100 wells you can see how our production goes up.
You've got to.
Superficially in your mind to say that for every well we get at least one pud sometimes too.
Undeveloped locations. So the growth of the company in terms of proved reserves in terms of income in terms of production is going to be phenomenal next year.
Turning to slide.
13.
If you think about looking at that.
This is our liquidity and our financial overview.
We've increased our credit facility now up to $195 million.
That gives us undrawn capacity of approximately $100 million plenty of liquidity, we will have the ability throughout the year to increase our borrowing base with the banks.
Short of anything happening.
And towards in terms of oil prices are.
We can't foresee at the present time, we're very bullish on oil prices at the present time, we completed our $25 million our offering.
Our S three eligible amount or have a shelf offering we do not plan on doing that we don't need that capital right now but that is a.
Potential if we did need capital for an acquisition or something and of course, we've talked about acquisitions in the past that we would be very select and make sure. It was a very accretive transaction before we would do it.
But this gives us an EBITDAX target of debt to EBITDA still staying below one time at the end of the quarter. We were 0.6, that's a little unfair because we have a lot of production by bringing these wells back on we're less than three.
Three in terms of debt to EBITDA and going forward, even with the four rig program. We do not plan on getting beyond one time debt to EBITDA and exiting the year at approximately 3233 times debt to EBITDA very healthy balance sheet.
Going forward.
Now on slide 14.
And looking at that.
You can look at this as kind of our hedge position keep in mind that philosophically, we hedge to protect our borrowing base, we hedge to protect our capital budget. We don't speculate on hedges right. Now we have approximately 4100 barrels a day hedged at a price of <unk>.
580, Mike mentioned and alluded to how that compares to our peers. Many of the big public companies are having huge write offs now and their hedges.
In good shape.
It gives us less than 20% of our predict projected volumes.
Going forward into next year that our hedge so we have plenty of exposure to the commodity, but yet we're going to hedge as necessary to make sure that we do.
Do it for protection, it's like an insurance policy, that's our philosophy.
And as mentioned, we don't speculate on hedges.
So on slide 15 to kind of wrap up our story.
This quarter was a major leap forward in a stepping stone for our growth going into 2022 now.
Now we've added our second and third rig we will.
Withstand the fourth rig before year end, we maintain our peer leading cost structure in the face of an inflationary pressures.
And that's a true testament to Mike and our drilling and operations team is pretty phenomenal with the costs going up like they are.
Because of their technological advances their knowledge of the business <unk> been able to continue and project for that $505 a foot in terms of our cost so.
Our team is extremely focused on operational excellence.
And I'll continue to be very proud of the lean team and all the hard work that they do to accomplish.
For me and for our shareholders and stakeholders.
Just phenomenal what they're doing right now I think we're the fastest growing company in the country.
We're going to continue that way, but we're not going to do it by getting out over our skis, we're going to do it in a responsible way and we're going to continue our peer leading margins, we're going to continue with staying less than one turn of debt to EBITDA in terms of leverage and we're going to continue with our cost levels.
And hopefully we are.
It varies.
Set in place an opportunity to take advantage of these commodity prices that we see going forward. So if you have any questions at all amount I'd like to open it up for questions.
Thank you ladies.
Ladies and gentlemen.
And lender if you wish to ask a question you will need to press star one on your telephone.
First question.
Jed Ross chemicals.
Yeah.
Okay.
Hello, operator.
Hey, John we can't hear you can you may ask your question. Okay, Yes, the operator cut out there for just a second thank you.
I wanted to make sure.
I understand Mr. Horlicks is comments on drilling at signal peak.
You are currently drilling a wolfcamp, a well and the lower sprayberry well is that correct.
That is correct yes.
Okay, and then you plan to drill a wolfcamp D in the fourth quarter.
Yes, or in the fourth quarter.
Currently drilling the Wolfcamp, a lower sprayberry pad will move in drilling two well Wolfcamp D pad about two five miles east of where we're currently drilling and those will be 215000 foot Wolfcamp D. Wells. We will then move down to the southern portion of our block and drill again another.
Two well Wolfcamp b pad, both 15000 feet wells.
Okay, and the last two well pad for the Wolfcamp D. That you mentioned is that going to be in the first quarter of 2022.
Yes, sure that drilling will roll into the first quarter. The completion of all of these wells will begin at the end of the fourth quarter and roll into the first so youll see production late first quarter from all of this activity.
Okay, Thanks, very much and.
Your 2022 guidance is very impressive.
Thank you John we appreciate it.
Pass it on.
Thank you.
Next.
We have.
Nicolas.
Seaports research.
Hey, good morning, guys.
Good morning Nicholas.
I was hoping you could talk a little bit more.
About the power projects and the generators that you have coming online I guess what is that.
As you as you kind of look at the financial model and the spend that you guys have been.
And on that.
Side of things, where does that show up does that is that where the drop in LOE is coming from.
And I guess, how much of the power, you're all going to be able to generate for I guess the rigs versus operations just trying to make sure I understand what all thats going to.
Mike answer that question and close you bad Nig that that's a great question and look towards in the third quarter going into all the way up to May of 2022, and our flat top areas, where we're putting in the substation and a solar farm and that project all of it will be energized.
Together in May of 2022, but between the third quarter of this year and the end of second quarter next year most of the new wells, we're bringing on we're having to generate that power locally. So we're doing numerous.
Numerous different ways local generation with just a propane power generator. Other places we build what's called mini grids trying to reduce that total cost in the third quarter with our 8200 BOE a day it averaged about $2 $5 per Boe.
That cost again as these wells come online the total cost will stay the same as it is today for the generators in place so per BOE <unk> will go down between now and next year on the into the second quarter. We will continue to have to add some generators. So as you look into 2002.
<unk> to the way you can kind of think about it is our <unk> was really hot in the third quarter.
Fourth quarter of this year going into the first and second next year Youll see it drop roughly a dollar a barrel each one of those quarters until may of 2022, and when that happens we flipped everything at flat to up to our power our power distribution system, so not only the <unk>.
<unk> for all of our pumps transfer pumps, but also our rigs are going to be plugged directly into the power lines. So that'll have a direct capex benefit for us as well as getting a lot of this local power and local fuel being burned in emissions will.
I'll now be efficient power from the power grid as well as from our solar farm during the daylight, we will be running our rigs and operating our wells off of that solar grid.
And hopefully that gives you a little flavor.
Yes.
One thing I would add to that is when we bring all of that back online in may or so of 2022, we anticipate our cost to go from that $8, 97% down to about $4 50 to $5 25 for our low cost significant savings.
When we bring everything in place.
Got it Thats great.
One other additional thing.
Just kind of like the shape of the production profile do you all anticipate.
Any significant.
Kind of offset production impacts like you saw in the third quarter as you kind of add these other rigs or is that more.
More specific to the third quarter, and we shouldnt see that that volume I guess its impact.
Going forward.
Okay.
Any time, Nick you are.
In effect fracking close Anne and doing large pad you can have some impact in terms of having to shut in offset production.
You're tracking well.
We won't see the impact that we had in the third quarter probably ever again.
The way, we are developing our areas and with our pad and with our water system and the infrastructure in place, we're going to be able to eliminate and reduce any impact as well.
While we go forward.
Most 25% of our area down south in the Wolf B formation specifically.
Is not near as impactful as it is and some of the other zones. So we don't see we see it happening every now and then but not like it was in the third quarter.
I got it that's great. That's all I had I appreciate the time guys. Thank you.
Thank you <expletive>.
Okay.
Yes.
Thank you.
Next we have Jeff Robertson with watercolor research.
Thank you Mike as you all to further develop the signal peak year, you do see the opportunity or necessity.
Down there to do some of the same type of things that you've done at flat to up.
Things like.
Electric substation upgrades or.
Enhancing our crude delivery contractor or solar or any of those opportunities to enhance your cost in that area.
Thanks, Jeff that's a great question.
When you look at our Capex budget for 2022 kind of the the high level way to look at that is about 75% of the capex going to flat to up about 25% of the drilling capex going into signal peak. However, when you look at the infrastructure that we've laid out.
It's opposite only about 25% up and flat top since most of the infrastructure is in place and it's already been billed at about 75% down in signal peak, However, as Jack mentioned, a little bit signal peaks, a little different the vast majority of what we had to do in flat top it will.
B a similar system just smaller so the total capex spend for the infrastructure will be lower from a power standpoint, a lot of the wells, mainly the Wolfcamp D wells will be gas lifted as opposed to running ESP. So we've got <unk>.
Longer time period before we would have to go upgrade the electrical infrastructure, but absolutely putting in the right water handling facilities and having the right gathering for oil and gas will be put in place.
Thank you for that and then.
Sorry, I lost my train of thought for a second.
Yes, if you.
If you think about the wolfcamp.
D.
Can you walk I know previously you all had put a number of locations in the slide deck can you quantify.
At some point update.
The location counts that you have put out for both flat top and signal peak.
Yes, or just the numbers that are in the presentation that we put out this morning, our updated but think of the Wolfcamp D. As six wells across a section.
Down in signal peak will average closer to 13000 foot laterals a lot of these are going to be 15000 foot wells, but from a density of wells across a mile at six wells per mile.
Okay.
And then last question I think on your slide you show the number of feet drilled.
Drilled in the third quarter.
Do you have a number at least that would tie to your 2022 capital program to the number two the footage you expect to drill next year.
Yes, our average footage again with the mix that we have it's closer to 12000 feet 12 to 12, five and Youre looking at two wells per rig per month, So think of it as 24 per rig times four at around that $505.
A foot.
For that 13012, five to 13000 foot total average lateral link and that will get you a real close to what we have in our budget.
Okay.
Thank you very much.
You bet Thanks, Jeff.
Yes.
Thank you.
Next we have a follow up with John White.
Thanks, and a follow up again on signal peak.
I know it's early.
The wells that you've drilled and completed.
Offset operator well.
How are those wells doing what kind of comments with you all.
Yes, John and again like I say, we're extremely excited about them.
For instance, our Wolfcamp D well had a IP.
30 rate of about 850 barrels of oil a day and a peak gas rate of close to one 5 million a day, especially with today's gas prices that it helps kind of juice. Our returns are a little bit as well, but just on strictly the oil. These are very strong results.
And again, we've got a got a nice acreage position the offset operators to our west have it's almost a lay down when you look at the wells that they have online and they've got some longer dated wells our wells tends to lay right on top of there from a performance standpoint. So again, we're very excited about it.
The acreage that we picked up we do have three wells that are being completed today that we are a non op in and so we will get some more data over on the west side of our acreage block as well.
Okay, Yes.
It sounds like good results.
On slide eight.
To the south.
Of your acreage, there's some white space and to the to the southwest and to the northeast there's some white space.
Did some of those areas fill in a little bit with the recent acquisition.
No. So they that is we're showing the yellow is the recent acquisitions again.
Like we always say, we're always in the market looking to add things if they are accretive to our portfolio.
Can see on this slide the weather, we have drilling to the south to help delineate that as well. So again very excited about what's out here. When you talk about what's south of the entire yellow block that's the <unk>.
Field so.
<unk>.
It will be very difficult, it's very high densely drilled very shallow stuff. So there may be some activity that could drill south under it.
Probably we will see a lot of movement further south.
Okay I really appreciate that detail. Thank you I'll pass it on thank.
Thank you.
Thank you next we have Jeff Robertson with what are total leases.
Just to follow up Jack as you look at a lot of the larger companies.
Keeping a lid on their cap on their capital spending in favor of distributing cash flow does that have any impact on the competitive pressure.
For a company like high peak in terms of either your costs or your ability to look at consolidation opportunities.
As the competitive pressure changed much with the way the companies are trying to execute their plans now.
Actually Jeff.
I don't see it impacting us in a negative way at all in terms of competitive pressure.
There are a growth company, we're not mature we can't be in a position of just maintaining with an acreage block is we've got to take advantage of the opportunity, we see but undoubtedly as we go forward and we build our reserves and bill of our production.
We'd be a lot more attractive for one of the bigger companies to want to acquire US one of the main reasons is because our performance on each individual well is much better than most of their economics on their big portfolios.
We have very high profit margin very big return on investment and internal rate of return and but in terms of <unk>.
The acquisition opportunities in consolidation for us.
When we look at everything Thats out there there's lots of opportunities in our area.
We just want to make sure that if we do it.
Stripping off the page so to speak and going to be accretive.
Our acquisition opportunities other than that we're going to go slow.
Virtually we do want to share with our shareholders. We just need to go ahead and get our acreage position to a point because even at the end of 2022 with four rigs running our growth profile just continued right into 2023 and 2024.
And we learned earlier, we're so early in it.
In the beginning of developing this wonderful asset we have that our focus is going to be to do that to start with.
Hopefully that thank you.
That does Jack I appreciate it thank you.
Uh huh.
Thank you there are no further questions I will now turn the call over to Jack Jack High power.
Okay. Just wanted to thank everybody for being on the call today and as you can see that this positioned us for growth in the future and position us for outstanding development program in 2022, and we're extremely excited and look forward to further conversation.
<unk>.
Lets you know the results of what we're accomplishing thank you very much.
This concludes today's conference call. Thank you all for participating you may now disconnect.
[music].
Yes.
[music].
[music].
[music].