Q4 2021 Laredo Petroleum Inc Earnings Call
Yeah.
Good day, ladies and gentlemen, and welcome to Laredo Petroleum, Inc. 's fourth quarter 2021 earnings Conference call. My name is Shannon and I'll be your operator for today.
At this time all participants are in listen only mode. We will be conducting a question and answer session. After the financial and operations report.
This conference call.
For REIT purposes.
It is now my pleasure to introduce Mr. Ron Hagood, Vice President Investor Relations you May proceed Sir.
Thank you and good morning.
Joining me today are Jason Pigott, President and Chief Executive Officer, Karen Chandler, Senior Vice President and Chief Operations Officer, and Brian Zimmerman Senior Vice President and Chief Financial Officer.
Well as other additional members of our management team during today's call, we'll be making forward looking statements.
These statements, including those describing our beliefs goals expectations forecast and assumptions are intended to be covered by the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Our actual results may differ from these forward looking statements for a variety of reasons many of which are beyond our control.
In addition, we will be making reference to non-GAAP financial measures.
Reconciliations to GAAP financial measures are included in the two press releases and presentation, we issued yesterday that detail, our financial and operating results for fourth quarter and full year 2021, as well as our 2022 capital budget outlook.
These press releases and presentation can be accessed on our website at www Dot Laredo Petro Dot com I will now.
Now I'll turn the call over to Jason Pigott, President and Chief Executive Officer.
Thank you Ron.
Good morning, and thanks for joining us today.
We performed exceptionally well in 2021 safely navigating the second year of a global pandemic, capturing important acquisitions that extended our inventory life, and making great strides to improve our balance sheet.
Our results were quite strong in our strategy to create future value for our shareholders as well defined and on track.
Our fourth quarter 2021 results were outstanding.
Total and oil production or above the top end of guidance, we generated $25 million of free cash flow and adjusted EBITDA of $182 million.
During full year 2021, first we materially increased our runway of high return oil weighted drilling locations, we were able to identify and capture two significant acquisitions that fit us perfectly adding more than 40000 acres in Howard in Western Glasscock County.
Deals were accretive to shareholders and deleveraging.
Deals initially added about 250 locations, but importantly, recent drilling success has added an additional 125 locations across areas, where we ascribing no value at the time of the acquisition.
We now have eight years of oil weighted high margin inventory in Howard in Western Glasscock County.
We grew proved oil reserves by nearly 80% and oil now makes up nearly 40% of our total reserves.
The benefits of increased oil reserves paired with the sale of lower margin gas weighted assets is apparent in our margins and a 260% increase in the SEC PV 10 value.
The WCS price of $75 more effective of the current environment, We estimate our reserve value would increase by almost $1 billion from the SEC PV 10 to approximately $4 $6 billion.
Third we significantly improved our capital structure, the reduction of leverage and increase liquidity.
We issued $400 million of senior notes at an attractive rate and raised $73 million through the issuance of common stock through our ATM program.
Our investments have been disciplined, allowing us to reduce our <unk> annualized net debt to adjusted EBITDA ratio to one nine times at year end 2021.
Two to four times a year ago lastly.
Lastly, we continue to demonstrate our commitment to ESG and issued comprehensive ESG and climate risk reports with data through year end 2020.
We established meaningful targets to reduce greenhouse gas methane emissions as well as the elimination of routine flaring by 2025.
We understand shareholder expectations for our industry and our board management team and other employees are committed to leading the way we aligned the board oversight responsibilities for ESG and appointed a chief sustainability officer reporting directly to me. Additionally, we included EEO, one data and our 2021 ESG report providing.
Clarity into the diversity of our workforce, our 2021 achievements provide a strong foundation for 2022.
Yesterday, we issued our outlook for this year, which aligns with our focus on capital efficient investments the generation of free cash flow and a continued strengthening of our balance sheet.
Our leverage reduction of six months ahead of previous expectations of year end 2022.
Fitting from higher commodity prices.
Quickly moving toward a time, when we'll be able to return significant cash to shareholders. We are excited about 2022, and the financial and operating opportunities that we see in front of us.
We expect to generate about $300 million in free cash flow in 2022.
Current commodity prices.
This in perspective that is about one quarter of our market cap today and over the next two years, we see the opportunity to deliver free cash flow equivalent to half our current market cap.
We understand the importance of leverage reduction $300 million of free cash flow is equivalent to about $17 per share.
Believe that paying down debt is the most shareholder friendly initiatives that we can deliver today.
We expect our leverage ratio will be one five times for the third quarter and we have line of sight to one times by midyear 2023.
Our capital investments are disciplined and are being allocated to our best opportunities.
We are fortunate to have a strong portfolio of high return oil projects and then I guess as Premier oil basin.
We're maintaining our capital discipline keeping activity levels flat from 2021, keeping oil production approximately flat from our Q4 'twenty one exit rate.
From the field to the office our people are dedicated to delivering results that will build value for our shareholders.
I will now turn the call over to Karen for an operations update.
Jason.
Our operations teams executed extremely well in 2021, as we seamlessly integrated two acquisitions.
Strong well results of Howard County.
Further extended our oil weighted inventory with the appraisal of two additional formations.
These achievements in 2021 underpinning our capital efficient 2022 development plan.
Well Howard County, we closed <unk>.
And went to work on new wells that are today, among the best performing wells all of our Howard County packages driving oil production above the high end of guidance for the fourth quarter.
Western Glasscock County, we completed the 10, well books package at the end of the fourth quarter.
Results of the eight wells in the lower Sprayberry and Wolfcamp, a and B formations are benefiting from our optimized completion design.
And are outperforming the previous package, we completed in western Glasscock cattle by approximately 38%.
These recent acquisitions in Howard and Western Glasscock panels.
Our subsequent appraisal activities have extended our oil weighted inventory runway to approximately eight years at current activity levels with a breakeven oil prices $55 or below the slides in our deck had details to help you understand the quality and depth of our inventory in each of our operating areas.
As Jason said, our forward development strategy allocates, our capital to our highest return projects in our county returns and efficiencies benefit from the fact that our acreage is contiguous and in many areas, we can drill extended laterals.
We plan to drill 815000 foot lateral wells of 2020 to our corporate strategy continues to be focused on leverage reduction in order to accomplish this we are maintaining flat activity levels. This year as we keep oil production relatively flat and generate strong free cash.
Close to optimize our capital efficiency for the year and synchronize our drilling and completion crews. We are currently operating three drilling rigs and two completion crews and plan to release, one rig and one crew by the end of the first quarter. After that we will maintain two rigs and one for sure.
The end of 2022 like the rest of the industry, we are impacted by service cost inflation.
Fourth quarter actuals, we have factored in approximately 15% inflation into our 2022 capital budget and have locked in much of our pricing for services through the first half of the year, including Frac services.
And casing cost we are currently working to extend our service contracts into the second half of 2022 and optimize our inventory management to further de risk our full year capital budget from any additional inflationary pressures I will now turn the call over to Brian for a financial update.
Thank you Karen.
<unk> exceptional progress over the last year, both financially and operationally.
These accomplishments have allowed us to enter 2022 with strong momentum and confidence in our ability to generate free cash flow reduce leverage and position us to return cash to shareholders in the near future.
For 2022, we expect to generate about $300 million of free cash flow at current commodity prices and this cash flow will be directed towards leverage reduction turning to our capital budget. Our 2022 investment program is approximately $520 million.
This plan until flat activity levels, when compared to 2021 offset by industry wide inflationary pressures in the oilfield service costs and higher non operated activity levels are.
Our budget also includes ESG focused investments of about $10 million to work towards the company's achievements of our announced 2025 emissions targets.
Our capital is being allocated to our highest return projects and is expected to hold our production flat with fourth quarter 2021 levels.
This will generate full year oil production growth of 24% to 34%.
There is no doubt that the recent run in oil price has led to industry wide inflation and higher costs at the field level. Our people are focused on mitigating higher costs through constant innovation and new efficiency gains we have locked in a significant portion of our costs for the first half of the year and as Karen noted our working towards extending this price certainty into the.
Second half of 2022 to underpin our capital budget and deleveraging goals. We continue to focus on hedging we have a strong track record of mitigating risks and ensuring a strong return for our capital investments our free cash flow and leverage ratio projections are supported by our current hedge positions covering about 75% of our projected oil.
Production in 2022.
We expect minor adjustments to our position throughout this year as we lock in near term prices to facilitate our leverage reduction goals.
For 2023, we have begun building our oil hedge position using collars with floors lines to further our leverage goals and ultimately returning cash to shareholders in 2023.
The current hedge volumes for 2023 are heavily weighted towards the front half of the year given us more confidence in achieving our leverage goals on the timelines previously messaged as previously discussed Andy has been and continues to be a focus for us since 2019, we have transformed laredo through oil weighted high margin acquisitions.
Adding significant production in locations with higher oil cuts these transactions accelerated our deleveraging, we're accretive to shareholders and put us in a position to deliver our capital to shareholders well ahead of what we would have otherwise been able to do.
Our strategy is well defined and shareholders should expect that any future acquisitions that complement our strategy to return value to shareholders made possible by continuing balance sheet improvement, we will continue to seek opportunities to grow our inventory of high margin wells to achieve the economies of scale necessary to drive sustainable free cash flow and <unk>.
Volatility in our operations and in our equity performance.
I will now turn the call back over to Jason for closing comments.
Before we take your questions I would like to sum up what our accomplishments in 2021 and really back to 2019 mean with eight years of high margin oil weighted inventory. We are now in a position for sustainable long term free cash flow generation.
This means we believe that we can meet our leverage target of one point out times by midyear 2023, and begin to return capital to shareholders in 2023.
While we will continue to look at acquisitions, we can be patient and opportunistic and what transactions we pursue.
We have the right team the right assets and are excited to come to work every day and deliver on our value creation strategy.
Operator, please open the line for questions.
Thank you to ask a question you will need to press star one on your telephone.
Draw your question press the pound key.
Please limit yourself to one question and one follow up.
Our first question comes from Karl Blunden with Goldman Sachs.
Your line is open.
Hi, good morning, Thanks, so much for the time.
You did mention that you'd be prudent with regard to M&A you may be different.
A different word, but certainly activity has been high.
Generally in the oil patch be interested in more of your thoughts around if you were to pursue that what kind of acquisitions. You are looking for now that you've built relatively comfortable inventory position.
And then perhaps a layer on top of that historically, you've used some equity funding you've used some debt funding just when you think about how to how to work with the balance sheet. As you continue this transition being interested in any thoughts on that.
Yeah, Great question, I think the future acquisitions would be just held to that somewhat standard to the deals we've done in the past they.
They need to be accretive to shareholders be deleveraging in a short amount of time.
And we would.
Anticipate any transaction, we would do would accelerate our deleveraging. So that's one of the key principles for it.
There's going to be there are several packages that will be out there. This year I think what we've tried to highlight today, though is the urgency for doing deals isn't as high because we have built up that inventory. We are focused on using our cash flows to pay down debt. So anything that we would do would be similar in nature to what we do.
Done that have really allowed us to you know if we hadn't done those acquisitions, we've done before we wouldn't be in the position. We are today to pay them to deliver this type of cash flow and delever more quickly with respect to the balance sheet and have a funding I'll turn it over to Brian . Thanks.
Thanks Nathan.
I would just add to that that it will need to be a combination of cash.
Cash and equity in order to facilitate both been deleveraging and being accretive to shareholders.
We've done it in the past.
As Jason said these these transactions would be would be used for us to grow our business and we still have we still have to finance them in a way that still fits within those two frameworks and so I would expect that balanced approach.
Like we've done in the last two going forward.
That's very helpful.
Just looking forward a bit you did mention the hedges for the first half of 2023 and I appreciate that hedging gets tougher and more expensive as you go further out but as you think about overall how much of the production you'd like to have hedged as you move into this new zone of.
Of leverage if you will right so you've de Levered pretty substantially and you are looking to delever more.
As your hedging approach going to change and how much of your volume.
It'd be hedge is that going to change longer term or any color on that would be helpful.
Yes, I mean, we've put in collars for the first quarter, which allows us to early next year, which allows us to again protect the downside, but also gives us exposure to the upside as we delever delever and achieve those milestones you're correct, we don't need to be hedged at the same levels that we do.
We have in the past, but as we get look look to start delivering a dividend to return cash to shareholders. We would want to be in a position that we have.
Feel confident we can do those in price fluctuations wouldn't mitigate our ability to deliver cash to shareholders. So we're going to consider all of those things, but we will not need to be is hedged at the levels that we are today as we achieve those milestones, but right now the hedging is focused on allowing us to get there and so that's why we've got that.
Doing fine thanks, Jason Thanks, Brian I appreciate it.
Thank you.
Our next question comes from Derrick Whitfield with Stifel. Your line is open.
Thanks, and good morning all.
Good morning, good morning.
For my first question I wanted to focus on your preference for allocation of free cash flow over the next couple of years, assuming the leverage reduction targets as noted how.
How should we think about your preference.
For return of capital between dividends and share repurchases and specifically.
If your valuation remains depressed as outlined on page six and it seems like Theres, a remarkable buying opportunity of your stock and you can purchase it at a price lower than your PDP value.
Sure.
Obviously, a great reason why you would like to have both options on the table I think where we sit today.
We would I would approach it from a balanced though using both.
It is too early for us to say, where we are in the market and what our share prices will be at the time that we get to those deleveraging targets, but I think both of those would be on the table and as we as we get below one and a half and half one point out clearly in our sights will articulate that plan.
Okay.
Great and for my follow up I'd like to shift over to the technical side.
Perhaps for charity in light of your 2022 operating plan could you speak to your comfort in drilling and completing 15000 foot laterals and comment.
When you're targeting your first within the 2022 plant.
Yes sure.
As we transitioned the program to two nor powered.
And really we're all spending.
And those lateral lengths to give us the efficiencies in our overall well cost and economics.
We've mentioned that we've got AP and the plan for this year all in Howard County.
Ben.
It's been a couple of years since we drilled 15000 foot laterals, although we have drilled.
No.
Extended lateral in the past actually quite significantly in the central Howard area that acreage position just laid out perfectly for us for 10000 foot laterals. So that's what we were developing during 2021.
And now we're living in the North tower, we're really seeing those extended laterals I'd be able to come in and impact our overall economics.
Currently we are finishing.
Our package into Howard County, we don't have our first 15000 foot laterals and recent development and those wells have been drilled completed.
In the final stages of drilling those out so overall from an operation standpoint.
Things going well in those packages and we are expecting.
Yes.
Results.
On a perfect basis similar to what we.
What we've seen in Howard County.
Great update thanks for your time.
Thank you Spencer.
Our next question from Nicholas Pope with Seaport Research Your line is open.
Good morning, everyone.
Good morning, Nick.
I'm just kind of curious.
Curious if you could.
Give a little more detail on.
Kind of the well costs, 10%.
Kind of inflationary pressure youre seeing I guess.
With the activity.
Kind of currently going with it.
Three rigs in and dropping one at the end of the.
At the end of the quarter.
How much is kind of locked in and how much have you already seen versus what's kind of anticipatory.
On those well costs I guess, I guess trying to understand where we are in that in that whole spectrum.
Yes sure.
So as.
As we talked about.
Our sales fairly significant cost pressures as we move through for Q and now into into early 2022.
Apply same team has worked really hard at really.
Defining where we're locked in either through fixed contracts or fixed inventory versus where we are potentially still exposed.
Two additional inflationary pressures as we move forward.
Mentioned and just my comment.
Our larger components, we've got locked in through first half that includes all of our Frac services that includes all of our queso.
As we've mentioned many times in the past.
We are providing our own sand from or from our own third party operated sand mine. So we've got that contract in place basically through the rest of the year, which significantly helps us offset additional inflationary pressures and sand, which are quite high right now.
So overall when we take a look at everything that we've got kind of locked in we feel very good about first half that were pretty much.
I walked in across across the board on costs and can deliver all of the capital budget as planned there as we continue to work into the second half, we're really trying to get everything pushed out further and really tightened up third quarter and fourth quarter. So we're doing that currently with areas such as <unk> and.
We'll just continue to work that through the program for the year.
Got it that's very helpful and.
And just real quick.
How do you anticipate this.
Split for the year between Glasscock and Howard County on the on the kind of the activity front.
Yes.
As we finished up 2021.
Second package of Western Glasscock wells looks wells.
We referred to in some detail.
Those came on right at the end of <unk>.
Transition to Howard County, and the expectation is all of our remaining completions.
And Howard County, Central North Howard County for 2021, our 2022.
Page 10 in our deck, if you have access to that online we've put in the top right. There is a graph that just shows where all the pills are coming from so we've got some wells coming in from Central Howard, but then it all transitions to northern Ireland.
Got it that's very helpful. That's all I had thanks guys.
Thank you.
Our next question comes from Eric <unk> with Golden Tree. Your line is open.
Hey, guys. Thanks for the call and for and for the slide they give a lot of good transparency. We appreciate that on slide 10, you guys.
Upper left hand quadrant, you guys feel your Capex by category I was hoping you could give a little bit more color on the facilities and land Capex and corporate Capex. If you could breakout facilities versus land that would be or just give us a rough sense that would be appreciated and if you could give us a little bit more color on.
What corporate Capex is and and for both of these categories are the the amount you're spending in 'twenty to are they sort of normal going forward or are they elevated for any reason this year. Thanks.
Yeah.
So I think Amit.
Comment on the facilities and land components and then also will point out there we're starting to work in our non op activity. So you can see that split out as well so from the facilities and land I mean this is a category that we reported out on detail and I think we haven't split out for all of our <unk> in 2021 spin.
In the release.
Much the we run at about a 15% on our D. C U E.
Or spend on facilities.
Land LMS and so this is pretty much in line with that we did call out in the release that.
We've got a $10 million in the year for facilities retrofit kits and just the work that we're doing that we've highlighted in the deck on ESG. So that would also be in that component.
And then on the on the corporate side that that is predominantly capitalized interest and G&A and if you look at this on a historical perspective.
The percent of budget, that's allocated to D. C. Any and then what we've just kind of traditionally called other it's very much in line with past years with <unk> do you see any representing approximately 85% of the total budget and that's that's very much in line. We just gave a little bit more granularity this time around in the breakout.
Okay terrific. Thanks, guys.
I appreciate the.
The presentation and congratulations on strong results.
Thanks, Eric.
Our next question from Gregg Brody with Bank of America. Your line is open.
Hey, good morning, guys.
Eric's comments a presentation very helpful very long time.
Thank you just just I was looking at page seven and you you mentioned in your press release.
How are you going to go near term development focus is going to be on the.
On the what looks to be the 40 to 40 to $45 breakeven.
Opportunities in your inventory, how do you think about.
That being out to approach them.
The 50 to 55 that are still very good in today's environment.
And why not do some of that now when we're in this environment.
Yeah. That's a great question, we again I guess you put through the spreadsheet.
Your biggest benefit is drilling your best wells first.
I will.
If you look at that lowest bucket you see more of that is in Howard County that is western Glasscock. So that's the plan for us is to drill our best stuff versus generating the most cash flow in the highest price environment. That's what allows us to delever at the rate, we're able to delever because those unless Howard wells are so strong.
So there is you know there is a risk as you mentioned if prices collapse, you may not get to the wells that are in that in those higher buckets, but right now we've got a lot of cushion. So that's that's how we allocated to drill the best stuff first we are excited about the new tests that open up additional wells in Howard County, and we highlighted though.
Middle Sprayberry those wells are new but they are both really strong and have achieved almost 100 900 barrels a day and are a much flatter decline profile, so far and so we.
Those are separated by 700 feet of rock. So we have an opportunity for those middle Sprayberry wells to either co develop or we believe come back into the telephone later, which allows us to kind of reuse the facilities or not have to build facilities for those wells when they're at their IP, so that might be the most efficient.
Development option.
For Us it's also Lisa that eastern most wells that we can kind of see in the middle Sprayberry. So far so the Oreo is further delineation that can be done.
To help prove it up more middle Sprayberry wells in Howard County, So I'd say, that's how we focus it and then again something new for this presentation as well as you know we do we'd be broken into three groups.
Howard Western Glasscock and Eastern you know there are wells in the eastern that the team has looked at that don't require a whole lot of.
Our work to really get them drill schedule ready those are things that you might think through drove bond or something like that at some point to accelerate the value of those on this in this price environment.
But again, we start including those we built out to almost 11 years worth of inventory at a $55 breakeven or less so a lot of words.
It gives you some character, but its really drilling our best Bill stuff first accelerates our deleveraging is how do we think about it.
That's very helpful.
And you kind of covered some additional questions I have there.
Is it the hope is that some of the some of the higher cost inventory.
Comes with lower as you drill longer potentially in those areas or.
And then on sales.
Yeah.
Go ahead, you can go there.
And then I will just add to that.
Eastern legacy stuff I was going to ask you about that there is.
Is there some capital allocated this year and you mentioned, maybe I think I heard you say that Joe is that something we could actually see this year.
Well, we haven't really talked a lot about it but it's just something that we we think about and ways to create or accelerate value out there. It's a higher cost of capital to do those things, but it's just it's an option.
And what's interesting as we think through these wells there are 5000 foot wells out there are 5000 foot laterals.
We really debated a lot of them do you include them not include them, because you're going to own 50% of a 10000 foot well, but you've got to go get the deal signed to own that 50% of a 10000 or farm ins to somebody else or get them to sell it to you. So I think theres more even more.
Have you looked at our inverse report or something like that they have even more inventory than we'd highlight here, but it just they require some deals.
Because those are at the back of the schedule and we're not working on those like we do you know getting Howard County rig schedule prepped and ready to go.
And just two more for you here if you don't mind.
Hugh.
I noticed that in your balance on your balance sheet your accrued capex undistributed revenues.
Royalties increased a bit over the previous quarter is there should we expect.
A negative working capital flow this year and does that is that in some of the guidance you've given.
Yes, I would expect it to fluctuate as prices go up we do company to capture that.
And then last one excuse me my kids this wasn't in the room, so I apologize.
But my last question for you was just.
Debt reduction you talked about doing that this year.
It is there.
I think if you dedicate all your free cash flow to pay down the credit facility you would have excess cash flow to maybe reduce the total quantum of senior debt is that something you're thinking about today or where is it.
Obviously, if you do it if you participate in M&A that may change that but but I'm just I'm.
I'm just.
Curious what your current thoughts are.
And maybe so.
I'm not going to have some 25 is that something you would maybe consider paying down some.
Hello.
If you still think you should be financing for that.
Yes, so well throughout this year and next year, we will constantly be looking at all the liability management options I am more focused on paying it off that I am extending it.
So it's callable now one rate its callable next January at a lower rate.
A lot of our cash build is in the back half of the year and so we'll just really have to see where things are.
If I'm able to get some of those back this year at a rate that makes sense.
And is accretive to the company its clearly something we would do.
My goal to stat cash on the balance sheet and how senior notes outstanding. So it's just it's just managing through that process.
And everything can change from this month to next month on the best ways to do that so, but it's something that we're constantly evaluating and monitoring the different options we have.
As our focus through this year.
Great.
Thank you very much guys.
Thank you.
Our next question is a follow up from Erik <unk> with Golden Tree. Your line is open.
Okay.
Hey, guys, Greg Greg just asked my question.
The final one for me is just on hedging it sounds like you don't believe you have to hedge as much in 'twenty. Three is you didnt in 'twenty two.
When you expect to make some progress on the balance sheet can you just maybe give us some sort of ballpark sense of parameters of what youre thinking about.
Yep.
Again, we will continue to layer on some hedges and we have traditionally been again, 75% hedged as we enter a year kind of like we are this year. So we're we're we're watching commodity prices again, we've favored these wider collars with bigger spreads just because if oil.
Rice should fall again, it protects us and we don't lose the progress that we've gained so we'll we'll continue to look at those again, we are favoring the first half of 2023 versus the full year. So it's just it's a decision that we can look at and talk about we can't we don't get specific parameters and we're going to be 50%.
But I'd say, it's more likely to be 50% hedged then and 75, but again, we're going to just continue to monitor prices see how things go again, we are where we.
We don't want to lose the ground we've gained on leverage reduction and so we will kind of put those hedges and so that once we get to those points, we have more flexibility, but we're not there yet we havent achieved the 1.5, yet so we've got to get the one five before we can start.
Reducing our hedging activity I guess quite a thing.
Thanks, and I guess, one of the one of the problems with setting a leverage target in a $90 barrel oil price environment is.
What might look like.
Prudent leverage at this point in the cycle might not look like prudent leverages. Another point in the cycle do you have other.
Other metrics that you are keeping an eye on with respect to your target leverage bounce.
Well, I'd say long term or.
Michael would be to get us if we're in this type of price environment below one one times I think of a one O.
And that $55 to $60 price range is ideal.
But we have to get there first.
Like Jason said, there's we're in such a substantially different place than we were a year ago because of price and because of the steps we took.
It's easy for us to look forward and say, we've got one over there, but we're not until we get to one five until we get to one O.
Got to keep our heads down, but our goal would be to be below one <unk>.
Price environment like this and target at one point in that $55 to $60 range and that's obviously easier said than done.
On a smaller company, but that's where we're headed and that's what that's our focus.
Thanks, guys I appreciate the call.
Thank you and this concludes the question and answer session I would now turn the call back over to Ron Hagood for closing remark.
We appreciate your interest in Laredo, and thanks for joining us for our call. This morning, and this concludes the call. Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
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