Q4 2021 Ring Energy Inc Earnings Call
[music].
Good morning, and welcome to the ring energy year end 2021 earnings conference call.
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Please note this event is being recorded.
I would now like to turn the conference over to Al Petrie Investor Relations for Ring Energy. Please go ahead.
Thank you Andrea and good morning, everyone. We appreciate your interest and ring energy well begin our call with comments from Paul Mckinney, Our chairman and CEO , who will provide an overview of key matters for the fourth quarter and full year, but will then turn the call over to Travis Thomas Ramos, Chief Financial Officer, who will review our finance.
Results, Paul will then return to discuss our future plans and outlook before we open the call up for questions also joining us on the call today and available for the Q&A session are Alex Dias executive VP of engineering, and corporate strategy Marinas, Baghdad executive VP of operations and <unk>.
Hey, Brooks executive VP of land legal human resources and marketing during the Q&A session. We ask you to limit your questions to one and a follow up.
Youre welcome to rejoin the queue later with additional questions. I would also note that we have posted our Q4 and full year 2021 investor presentation to our website during.
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 differ materially from those projected in the forward looking statements and the company can give no assurance.
Such forward looking statements will prove to be correct.
<unk> disclaims any intentions or obligations 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 our filings with the SEC. These.
These documents can be found in the investors section of our website should one or more of these risks materialize or should underlying assumptions prove incorrect actual results may vary materially. This conference call also includes references to certain non-GAAP financial measures.
A conciliation of these non-GAAP financial measures to the most directly comparable measure under GAAP are contained in our earnings announcement released yesterday. Finally as a reminder, this conference is being call is being recorded I would now like to turn the call over to Paul Mckinney, Our chairman and CEO .
Thank you al and welcome everybody and thank you for your interest in renewable energy and for joining us today for our fourth quarter and year end 2021 earnings call. As you May know, we finished 2021 with strong fourth quarter results, we generated free cash flow of $9 $3 million during the <unk>.
Fourth quarter, and 20, and a half million dollars of free cash flow during the full year of 2021, marking our ninth consecutive quarter of producing positive cash flow. We use the cash flow to help pay down $23 million of debt in 2021, including 5 million during the fourth quarter.
Which helped us reduce our interest expense by almost 18% when compared to the prior year.
During the fourth quarter, we enjoyed higher product prices, while continuing to make progress driving operational efficiencies that resulted in adjusted EBITDA and adjusted net income growth over the third quarter of 2021 of 21% and 46% respectively.
For the full year of 2021, we posted adjusted EBITDA of $83 3 million and adjusted net income was $30 6 million, which was 48% higher than the full year of 2020.
We ended 2021 with $61 6 million of liquidity, a 10% increase from the end of the third quarter and 52% higher year over year. If you recall, we have a $1 billion revolving credit facility with a borrowing base of $350 million, which.
Was reaffirmed and do something avail.
Availability under our credit facility at December 31, 2021 was $59 $2 million with respect to our development initiatives.
We continue to benefit from.
Our successful 2021 drilling program that targeted high rate of return opportunities in our northwest shelf and Central Basin platform areas. The result was fourth quarter 2021 sequential sales volume growth of 11%, where we averaged 9153 barrels of oil equivalent per day.
Of which 85% was oil.
We concluded our 2021 drilling program with a phase four package of two wells that were drilled and completed on time and within budget and placed on production in the fourth quarter.
Both wells have performed at or above expectations to date, which is consistent with the overall results of our 2021 program. We drilled 11 wells last year, including eight wells in the North West shelf and three wells in the Central Basin platform, and we completed 13 wells, including 10 wells in North West shelf and three wells in the Central Basin.
Yeah.
My favorite part of what we accomplished last year and our drilling and completion program with US our success in the Central Basin platform.
All three CVP wells are performing better than the average wells drilled there in the past.
With two of our wells are on course to exceed the ultimate recovery of the best wells drilled in the offsetting area. We accomplish this by focusing on the geology selecting the best landing zones and improvements in our completion methods, we not only improve the performance of our wells, we unlock incremental value from the law.
<unk> portion of our asset base.
In 2021, we also converted 25 wells from downhole electrical submersible pumps to Rod pumps, something we call <unk> for short.
In 2021, we COVID-19 wells in the North West shelf and six wells in the Central Basin platform. The long term benefit of our targeted Ctr program comes in two forms.
First we were able to significantly reduce our operating costs through lower electricity usage and considerably lower repair cost the resulting lower operating costs drive the second bad debt, which is the wells generally experience longer economic lives, leading to higher ultimate recovery of the oil and gas reserves with.
With respect to our reserves, our 2021 capital development program helped us grow our year end 2021, as we see proved reserves by 2% to 77 8 million barrels of oil equivalent more than replacing our production for the full year.
Turning to our 2022 outlook on January one nearly 60% of our low price hedges rolled off which allows us to capitalize on improved commodity prices and generate higher revenue and operating cash flow assuming of course that commodity prices remained strong in response, we are.
<unk>, our capital spending to organically grow production and adjusted EBITDA, we intend to continue paying down debt and we plan to do so all within operating cash flow.
The success of our 2021 program has given us confidence to increase our 2022 capital investment program, which is designed to enhance our scale and improve our financial metrics, while dramatically, reducing our leverage ratio. We are forecasting a meaningful reduction of our leverage ratio from approximately $3.
Five times at December 31, 2021 to less than two times at the end of 2022.
As we have said earlier, we initiated a one rig continuous drilling program in late January which is again focus on our highest rate of return inventory in both the northwest shelf and Central basin platform areas to date four wells have been drilled in the central basin platform, including two wells that were placed on production.
Earlier this month and two wells that are expected to be online in April .
By running a continuous drilling program. We believe we can more than offset the natural decline rates of our wells and grow our quarterly production levels starting in the second quarter, we anticipate full year production to increase almost 10% based on the midpoint of our guidance of course, we will continue to return.
The ability to adjust our drilling and other capital spending program to reflect material changes in our commodity prices.
We currently plan to drill 25 to 33 wells in 2022, and complete 25 to 30 wells across our northwest shelf and Central Basin platform acreage. The mid point of our total capital spending guidance includes approximate 82% for drilling completion and equipping activities.
Completing our drilling program or I'm, sorry, complementing our drilling program. We are allocating approximately 12% for continued execution of our successful Ctr re completion and capital Workover programs with the remaining 6% and 10 for land related costs and other miscellaneous spending our <unk>.
<unk> reflects our current view of the inflationary impact on our operating and development costs.
Now before I turn the call over to travelers I would like to share one more point with you concerning our ESG initiatives promote.
Promoting environmental Steward stewardship, supporting our employees and communities, where we work and ensuring sound corporate governance are cornerstones of our culture.
Last year, we made substantial progress on our ESG journey by issuing our inaugural ESG report.
Advising all of our charters and updating our corporate guidelines to be consistent with modern governance practices. We believe that ESG is not just the responsibility of our board and our executive leadership, but also extends to our employees. Our inaugural report provides a great foundation upon which to build and we are.
Continued to demonstrate the importance of ESG to the long term sustainability of this company so with that I will turn it over to travelers to discuss our financial results in more detail Travis.
Thanks, Paul and good morning, everyone for the fourth quarter of 2021, we generated revenues of $59 7 million and net income of $24 1 million or 20.
Per diluted share.
Excluding the estimated after tax impact of pre tax items, including a $15 $2 million noncash unrealized gain on hedges and approximately 900000 for share based compensation expense, our fourth quarter. Adjusted net income was $9 $9 million or <unk> 10 per share for.
For the full year of 2021, we generated revenues of $196 $3 million and net income of $3 3 million or <unk> <unk> per diluted share.
Excluding the estimated after tax impact of pre tax items, including a $25 $1 million noncash unrealized loss on hedges and to $2 4 million for share based compensation expense. Our full year. Adjusted net income was $30 6 million or <unk> 31 cents per share.
During the fourth quarter of 2021, we had approximately $26 million in cash flow from operations of $11 3 million in capital expenditures. The combined result was free cash flow of $9 $3 million.
For the full year 2021, we had approximately $69 5 million in cash flow from operations $51 million in capital expenditures and $2 million in divestiture proceeds. The combined result was free cash flow of $25 million for.
For the three months ended December 31, 2021, we had oil sales of 715163 barrels and natural gas sales of 761682 Mcf for total of 842110 Boe E.
Our fourth quarter of 2021 realized pricing was $76 35 per barrel of oil and $6 65 per Mcf natural gas for an average of $70 85 per Boe.
The differential between our average oil price received and Nymex <unk> was a negative $1 12 per barrel for the fourth quarter.
Of 2021 versus our third quarter average differential of negative $1 five per barrel, our average natural gas price differential from Henry hub was a positive $1 85 per mcf for the fourth quarter versus the third quarter positive differential of $1 43 per Mcf.
For the full year 2021, we had oil sales of 2.686 million 939 barrels.
And natural gas sales of 2.535 million 188, Mcf for a total of $3 million 109470 Boe.
Our full year 2021 realized pricing was $67 50 50.
<unk> 56 per barrel of oil and $5 83 per Mcf for an average of $63 13 per Boe.
For more details concerning our financial financials and other income statement line items. Please refer to our earnings release, and 10-K filed with the SEC yesterday.
Of course, I will be happy to answer any questions. You may have during today's Q&A sessions.
One of our top priorities coming into 2021 was to strengthen our balance sheet through debt reduction our strategy has been to capitalize on the organic opportunities within our portfolio to maintain production increase liquidity and produce strong cash flows. We are pleased with our fourth quarter results as we once again generated free cash flow and strengthened our financial position.
By paying down debt, which in turn increased our liquidity.
Looking forward the levels of free cash flow and the cadence of debt Paydown will continued to be driven by the timing of capital spending and market conditions.
As of December 31, 2021, we had $290 million drawn on our revolving credit facility and liquidity of $61 6 million, including $2 4 million of cash and $59 2 million available on our revolver, which includes a reduction of approximately 800000 for letters of credit we are pleased to further.
Pay down.
Our revolver by $5 million in the fourth quarter, leading to a total debt reduction of $23 million for the full year of 2021.
Turning to our outlook for the first quarter and full year of 2022.
As Paul discussed for the full year 2022, we anticipate total capital spending of $120 million to $140 million, which includes estimated cost to drill 25 to 33 wells and complete 25% to 30 wells primarily in the northwest shelf, our full year capital spending outlook inquiries.
Targeted well reactivation workovers infrastructure upgrades and continuing our successful Ctr program in the northwest shelf and the Central Basin platform.
Also included in our full year estimate is anticipated spending for leasing contractual drilling obligations and non operated drilling completion and capital Workovers.
We remain focused on further paying down debt and strengthening our financial position. Our full year 2022 capital spending plans are expected to generate strong operating cash flows that fully that fully fund our capital investment plans of course as Paul noted our 2022 capital spending program assumes a <unk>.
<unk> commodity pricing environment, if prices were to pull back materially we have the flexibility to reduce capital spending as necessary.
Supported by our targeted capital development program and continued focus on maintaining operations excellence. We currently expect full year 2022 sales volumes of 9000 to 9600 Boe per day compared with full year 2021 average sales volumes of 8519 Boe per day and <unk>.
9% year over year increase using the midpoint of our guidance.
Looking at the first quarter.
Drilling under our new continuous drilling program began in late January .
As such there is minimal additional.
Production impact expected for the new wells in the first quarter, including the expected normal decline in production during the first quarter and some short term weather related sales disruptions first quarter 2020 sales are expected to be in the range of 8500 to 8700 Boe per day.
Second quarter 2002 to 2022 sales are expected to reflect the benefit of the new continuous drilling program.
For full year of 2022, we anticipate low of $10 90 to $12 per Boe and.
In gathering processing and transportation or GPT costs of $1 60 to $2 per Boe.
Contributing to the increased LOE per BOE cost for from 2021 are inflationary related increases partially offset by lower anticipated operation operating costs from our targeted and ongoing Ctr program and the purchase of previously leased ESP.
Looking at operating costs for the first quarter. We currently expect LOE to range between $10 90, and $11 25 per Boe and.
And GPT costs of $1 60 to $1 75 per Boe.
Turning to our hedge position.
As Paul discussed we are pleased that the majority of our low priced hedges rolled off January one.
This provides us with the opportunity for substantially higher revenue and operating cash flow in 2022 based on continued strong oil price environment.
So with that I'll turn it back to Paul for his closing comments before Q&A.
<unk>.
Thank you Travis.
And as you just heard we have a solid asset base that is generating strong operating cash flow and adjusted EBITDA, especially in the current pricing environment, we are planning to strategically and profitably grow our production to build scale through a continuous drilling program.
We believe that by increasing size and scale, we can more easily incorporate accretive acquisitions that meet our investment criteria and align with our strategic vision and closing.
We speak to our shareholders regularly and for some time now they have expressed that once we get beyond 2021, they wanted to see us grow more in 2022.
Like your management team and board they want us to build size and scale to reduce the volatility we have had in the past and become a more sustainable company. We believe our plans for increased drilling and capital investments. This year puts us well on that path and does a small part to help the current supply situation.
World is facing nonetheless, we will monitor commodity prices to ensure our increased capital spending allows us to remain cash flow positive reduce our debt and improve our leverage ratio in summary, we are excited about the future.
And ring energy is well positioned for continued success in 2022 and beyond and with that I will turn this call over to Andrea for questions Andrea.
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.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And our first question will come from Jeffrey Campbell of Alliance Global Partners. Please go ahead.
Good morning, Paul and congratulations on staying the course on spending and debt reduction in 2021, I'll limit myself to three questions. This morning.
First I wanted to ask if any third party facilities downtime has been included in the 2022 guidance and if so is there any reasonable chance that this could improve over the course of the year.
Actually it does things.
Things have improved as we've gone through 2022.
There still is uncertainty associated with the third party facilities one of the big issues that we will face as we marched through our capital drilling program. This year is the takeaway capacity for that gas production as you know we're drilling in both the central basin platform and the northwest shelf.
Both of those areas have their own and unique issues associated with gas takeaway and so it could be an issue.
But our forecast right now have incorporated our best estimate and associated with that debt.
Restriction.
Okay, great I appreciate that color.
Second question looking out into 2023.
Do you expect your bankers to continue to impose hedging requirements or maybe put another way is there a debt level at which those requirements might be reduced or eliminated completely and here I'm kind of thinking of the two times leverage goal that you set for year end 2022.
Yeah, that's a good question.
Our credit facility the way. It is currently written only requires us.
To maintain the hedges that we had in place.
From last year into 2022, there are no requirements going into 2023.
And so the hedging activity that we will pursue all will be one of what we've described in the past as a as an opportunistic hedging strategy. We believe it's the right thing to do to protect our cash flows and also put in the necessary protection. So that we can.
Pay down debt as planned.
And but beyond those requirements, we believe our shareholders want to benefit from.
The marketplace or what they believed that the marketplace has to offer and so we want our shareholders to participate.
In the marketplace and so but.
But we will have a responsible.
Hedging strategy that that does take advantage of the opportunities in marketplace provides that answer your question.
It does and it's great to hear that Youre going to have complete freedom to do what you want to do in 2023.
Well, yes, but complete freedom I don't know about complete freedom, but yes.
I'll go with you on that.
And how about expanded okay.
The freedom there you go.
Finally, your Delaware Basin update noted that the proceeds from the sale when consummated.
Would go to further debt reduction than I thought this was interesting since in the past, there's usually been some mention of potential M&A as another variable. So I just wondered if you could expand on this a little bit.
Oh, there you go.
By taking the proceeds from the sale of our Delaware assets and applying that to that that also increases our liquidity. It also increases our ability to take down another opportunity using cash and so.
We are every bit as much focused on on acquisitions in A&D.
As we have said in the past.
The volatility that you that we're all experiencing right now in the marketplace has created kind of.
I would just call it confusion a lot of noise out there. So people don't know really what price deck you then.
So it's not that there is increase the gap between expected buyers and sellers, but it has created a lot of confusion because people are still question on peso what price deck do I want to use as we saw just this morning, we saw another uptick in prices followed behind.
Sharp reductions in oil prices as a result of the world's interpretation of what's going on over there between Russia and Ukraine. So.
But yes, we're still focused on acquisitions and divestitures and we will continue to be so.
And our plan.
For the Delaware asset is once those are sold that we will apply that to debt reduction.
Okay, Great I appreciate the expansion and again congratulations on the fourth quarter and we look forward to a good 2022.
Thank you Jeff have a great day.
The next question comes from Noel Parks of Tuohy Brothers. Please go ahead.
Yeah.
Hi, good morning.
Good morning, how are you.
Good Thanks, just a couple of things.
The hedge.
Later in the 1000 barrels a day it.
Just shy of 85 I was just curious how how long.
<unk> been sort of monitoring the market and the strip, but before he decided to pull the trigger on that.
Well, we watch it.
Pretty much every day, we get a report and.
And every morning kind of summarizes our mark to market differences.
Our hedge position in the current marketplace.
And we look at the statistics like.
Like we've said in the past we are pursuing one want to continue to pursue.
An opportunistic strategy that puts it in the right defenses to protect our capital spending program and our debt repayment plans.
But this last year or earlier this year I should say when the opportunity came along we were at.
Looking at some.
Historical records associated with what was out there in the marketplace and we decided that with an additional contract of 1000 barrels a day that went a long way to ensuring our capital spending and our debt repayment plans and so we took it.
Great, Thanks, and with cost inflation being such a hot topic. These days I Wonder if you could talk about the arrangement you have for your rig and weather.
You have it on our under contract or are just paying a spot rate for it and just what your outlook is there.
Yeah, we have a a.
A five well rolling contract with our drilling contracted right now.
And that contract allows both parties.
To make adjustments as you roll along throughout the year to take into account.
Inflationary measures and so due to the volatility that we've experienced.
We've seen spurts of really high rates of inflation, and then things level off.
It's all associated with the supply chain.
What's going on around the world and I'll just take pipe for example, if you look at our pipe pricing today versus what we were paying in the in the fourth quarter of 2020 were more than double those costs now and so we've seen increases now.
Across the board, whereas initially they were steel prices, but now we've seen prices price increases where all the goods and services that we use whether it's the many nerve racking or just whatever it is and so we'll see how things go. It is my prediction, though that the supply chain will start to level out as we go throughout the year.
Oh great.
Great.
Anything in particular that that scares you in that direction.
Well I mean.
The World has always been good to respond to changing situations and and so yes, we've seen some volatility.
Seeing some.
Pretty significant inflation in various different areas.
And the manufacturing process whenever prices get really really high for any one product somebody else decides they want to get into the business and so you just the supply.
And demand situation has proven that.
Our capitalist society has always been able to respond to the.
The needs of the economy, and I am confident that American people will follow through again.
Great. Thanks, a lot.
Thank you Noel.
Yeah.
Once again, if you would like to ask a question. Please press Star then one.
Our next question will come from Neal Dingmann of truly please go ahead.
Good morning, Paul Thanks for the details my all my question do you guys.
Good job getting travels we're laying out what youre seeing for this quarter next quarter on production I guess I don't want to get ahead of myself, but if.
Prices at all expect to come down as you said for some of the Oss.
Would you all you can consider it.
I look at and say I love the quick payback.
And as you all have.
Would you all consider even adding more activity either through workovers or another rig.
Again overall macro prices remain high and service costs, even go lower.
Yes, and you bring up a really interesting point Neal.
Right now all the things that we've addressed basically would suggest that we're going to be responsible.
With respect to our capital spending plans that we're going to stay within cash flow.
If we take yours scenario, you just laid out and cash flows actually increase even considerably more.
Yes, that's going to allow us to pay down debt faster, but it's also going to give us the opportunity to accelerate our capital spending programs now.
There are some realistic limitations to our capital spending programs, let's let's talk about some of those one of those I mentioned, a little bit earlier, our gas takeaway in both the central basin platform and northwest shelf. Although they are for different reasons. There are limitations to how much gas we can take away and so we get.
Get ahead of ourselves and drill really fast when we pick up a second rig we may outstrip the ability for gas takeaway. The other issue that we had even though it's not as acute would be our water disposal.
Now we have the water disposal facilities.
Facilities necessary for the wells, we plan to drill, but it's going to be close to and so.
The investment necessary to increase our disposal capacity is not that much.
We could probably take care of that but the biggest limitation probably would be gas takeaway and that would limit how much growth we could actually have at least in the area that we're currently focused.
No that totally makes sense and then what.
What are you seeing Paul as far as.
And a little bit.
To use a higher working interest or just to get them back, particularly on big deals that you guys always seem to be sort of salary and I'm. Just wondering what the competition is like either for bolt ons either on the platform the shelf.
Are there opportunities how does that look today.
Versus let's say a year ago.
Is that bid ask spread pretty wide or not necessarily near area because it may be less competition.
Yeah, we have.
Although we have participated in some of the marketed deals that other people have bid on and were successful.
<unk>, we have been unsuccessful in one or two of the attempts that we thought would be great bolt on to the company.
But our preferred method is to go to the principles of that own and operate certain assets and trying to negotiate something.
Off the market.
And Thats because were.
Persnickety might be the right word we're we don't want to dilute the various metrics that have led to our what we consider superior returns. So we have really low shallow declines we have high margins and our operating operated.
Operated wells the undeveloped opportunities have really superior economics, and so what we're trying to do is we're trying to be disciplined we're trying to acquire assets that meet that criteria. Those are also the superior assets out there in the marketplace and everybody wants right. So the competition is pretty stiff and so the thing that have really kept us from <unk>.
Being successful up to now I think is really our balance sheet.
We have tried to.
Use a combination of cash and equity.
But as you know our strategy has been all along and we haven't been.
Secretive about this at all.
We have been willing to use equity and cash.
And a transaction, but the goal was always to take care of our existing shareholders by making sure. It's accretive on the tail end of that transaction. It would be accretive on whatever metric you want to use whether it's cash flow per share reserves per share production per share, but at the same time would it also be a leverage ratio reducing activity strengthening the balance sheet strengthening.
The credit facility, that's not been an easy thing to do but we are very very active every single day, we're working on those those opportunities, we keep making phone calls others have called us.
And so we're looking for partners that want to help us do that because anybody who takes our stock of course would be a partner right and so it is something that we work on every single day now getting back to your point about.
Bid ask and sell spreads.
Yes, there is always that the out there these volatile times make it probably a little more challenging but there are ways to overcome that and so you can put in contingent payments associated with okay. Let's say these oil prices stay high for a longer period of time than what the forward strip is showing well then you put some kind of a.
Contingent payment out there if oil prices are higher or you come up with other creative ways to bring a deal down.
And also reduce the anxiety associated with the difference between the buyers and the sellers are trying to achieve.
No that makes sense and then just lastly, you touched on this a little bit but you guys talked about a lot I don't know if you are one of the guys want to get the operationally, but you guys continue to hit some of these record wells is it just sort of what you're continuing to learn as it through more efficiencies.
What's driving that.
Again, I don't know that you guys have you been giving yourself enough credit, but I'd love to hear more on.
Pushing these results.
Yeah, all the credit goes to my Geoscience and engineering.
Teams these guys.
They strive for excellence everyday.
We keep our ear to the ground and we continue to to walk in circles of others in the industry that are out there on the leading edge.
We don't want to be on the bleeding edge, but by staying close to those communities keeping close contact with those that are developing new technologies and learning what are those technologies would apply to our specific rock because every rock is different.
And so when I give all the credit to our operating team and also our completions and drilling teams, we're staying up on on all the technologies. Our geoscience guys have really focused on the geology and Petro physics.
Neylon the landing zones and so if you look at what we did in the Central Basin platform.
Yeah, our teams our technical team just nailed it and so I can't tell you how happy I am with with respect to that because for.
For our time period.
We are concentrating our investments up there in the northwest shelf.
But we had so much legacy acreage and so many drilling and drilling opportunities in the Central Basin platform is great now that we've been able to focus on the technology is now is really unlock the value of that and those economics, although they used to be considered inferior I mean I'm not so sure that in theory, they're rarely really strong economics and so the.
Difference between the breakeven costs in one area to the other is arguably within our margin of error to calculate from and the variability between wells and so yeah, we're talking about $25 breakeven causal northwest shelf, but central basin platform is probably going to see only a 30 or so.
Yes.
Thanks, so much guys.
Youre welcome.
Once again, if you would like to ask a question. Please press Star then one.
Our next question will come from Dennis Richter, a private investor. Please go ahead.
Good morning, Paul Congratulations to a great 2001.
Hey, Thank you. Thank you.
So actually.
You just answered one of my questions. Then it was regarding the Central Basin platform. Your recent wells and how they compare to the north west shelf.
Can you give a little bit more color in terms of how much running room do you have in terms of acreage that is or how many drilling locations do you, possibly could have there with those kind of economics.
With Dennis I've got to tell you I don't have the number of undeveloped locations in our newly.
<unk> Reserve report for those areas, but I do know that right now our plans for 2022 include nine wells in the Central Basin platform four of those have already been drilled.
When looking at the economics.
Again in the performance of the three wells, we drilled in 2021.
Look really really strong.
Now, although the rest right now is slated for the northwest shelf.
Our guidance range also allows for probably another eight or so wells, where we haven't completed the work and so will we go back down in the Central Basin platform. We do have more locations down there to drill and of course, we also have a really handsome inventory of under a location in northwest shelf doll as well and so but for this year.
No for sure we've got less.
Energy prices.
Fall below levels that we're currently anticipating.
Right now we've got nine wells slated for the Central basin platform and the remaining <unk>.
16, or so in the northwest shelf.
Okay and just one other question and this is a little bit in terms of the C O two.
Kind of secondary recovery or a waterflood potential something that this is your neighbor.
North West shelf of Riley.
Exploration in Permian.
We're doing a pilot project just wanted to see if in terms of the potential there to do something like that if that is being looked at.
And if you can shed some color on that if you are they talk about.
Are you able to recover possibly three to five times the primary.
Rick Capri.
And that acreage and right you have your acreage right next to it. So I just wanted to see if you will.
Are willing to give some kind of.
Prospective on that appreciate it.
Yes.
Dennis just to let you know and we know.
Raleigh, Permian Guy as well.
We've all trade secrets and shared our opinions we are aware of their programs. We've actually had a conference call with those guys, where we talked about their operations our operations their plans for their <unk>.
<unk> II program.
As you May know, maybe you don't but the section where they permitted there.
Cotwo and water injection wells are in the section right next to our wells and so yes, we shared quite a bit of information we wish them. All the best this goes back to developing technologies.
It takes you take on additional risk when you try these new ideas.
But if the idea is pardon me I'm, losing my throat here.
But if those ideas.
Generate positive results.
Well, then that type of an opportunity.
Can be applied to all of the San Andres horizontal oil play up there in the Yoakum County area.
So not only would have benefit Ronnie.
Permian, but it would also benefit the.
The other operators would choose to apply that technology.
In sum, we're all standing back churn Raleigh on we really hope that they have really strong success because their success could also lead to success in additional recoveries for us.
That's great. Thank you that's all for me.
Thank you Dennis.
This concludes our question and answer session I would like to turn the conference back over to Paul Mckinney for any closing remarks.
Thank you Andrea and all of you that have joined US on the call. Thank you very much. Thank you for the questions and the interest in ring.
Looking forward to a really strong year this year and and just we hope that you will continue to invest in trust your investment with US because we are working hard for you. This concludes our meeting for today.
The.
<unk> is now concluded. Thank you for attending today's presentation and you may now disconnect.