Q1 2022 ONEOK Inc Earnings Call
Please standby we're about to begin.
Good day and welcome to the first quarter 2022 one oak earnings call. Today's conference is being recorded at this time I would like to turn the conference over to Andrew's Iola. Please go ahead Sir.
Thank you Paula and welcome to <unk> first quarter 2022 earnings call, we issued our earnings release and presentation. After the markets closed yesterday and those materials are on our website.
After our prepared remarks management will be available to take your questions.
Statements made during this call that might include one of his expectations or predictions should be considered forward looking statements and are covered by the safe Harbor provision of the securities acts of 1933 in 1934 <unk>.
Actual results could differ materially from those projected in forward looking statements.
For a discussion of factors that could cause actual results to differ please refer to our SEC filings.
Just a reminder for Q&A, we ask that you limit yourself to one question and one follow up in order to fit in as many of you as we can.
With that I'll turn the call over to Pierce Norton, President and Chief Executive Officer peers.
Thanks, Andrew.
Morning, everyone and thank you for joining us today.
Appreciate your interest and investment in our company.
On today's call is Walt Hulse, Chief Financial Officer, and Executive Vice President Investor Relations, and corporate development, and Kevin Burdick Executive Vice President and Chief Commercial Officer also available to answer your questions are Sheridan swords senior Vice president of natural gas liquids and natural gas gathering and processing.
And Chuck Kelly Senior Vice President of natural gas pipelines.
Yesterday, we announced first quarter 2022.
Results, which highlighted year over year natural gas and NGL volume growth, earning.
Earnings significantly increased year over year, when adjusting for the favorable winter storm Yuri impact in the first quarter of 2021.
Customer and producer conversations continue to point to additional activity through the remainder of the year supported by strong demand for U S energy and commodity prices far exceeding basin breakeven economics.
<unk> built in operating leverage and proven track record of disciplined and intentional growth have positioned us well to support increasing producer activity levels.
Our systems have significant capacity to grow alongside the needs of our customers and.
And because of our large infrastructure projects are complete we now have opportunities for bolt on expansion projects with quicker in service dates attractive returns and minimal capital requirements.
Not only are we expecting strong activity going forward, but our position in the key U S. Shale basins provides us a long runway to continue our efforts to help address increasing domestic and international energy demand current events.
<unk> continued to demonstrate the importance of natural gas and natural gas liquids long term energy transformation and highlight the critical role that one O plays in providing essential energy products and services.
Before I hand, the call over I'd like to discuss the recent weather events that have impacted our Rocky Mountain region operations in April and into early May.
First of all I want to thank our employees in the area.
And those who supported from other locations to ensure that we were as prepared as possible for these two unprecedented weather events within a two week period.
Their April storms caused the blizzard conditions record setting snowfall high winds and extensive power outages across North Dakota, Montana, and South Dakota.
All of our employees staff facilities during these conditions to maintain the safe and reliable operations of our assets.
All of these employees were also dealing with lost power and damage at their own homes.
Widespread outages left many of our facilities without power for several days and a significant number of wells across the Williston basin were shut in.
Our primary focus has been on the safety of our employees.
Assets and the communities, where we operate as we continue to work through the full impact of the storms.
Due to the basin wide power outages, our April Rocky Mountain region volumes were reduced in both our natural gas gathering and processing and natural gas liquid segments by approximately 20%.
May Vivus will continued to be impacted as down power lines are replaced currently our process volumes are more than $1 1 billion cubic feet per day, and our NGL volumes are more than 320000 barrels per day and trending up as shut in wells are brought back online.
The coordination during and since these weather events with our customers local agencies communities and other operators in the area has been impressive once again, highlighting the resiliency of our employees assets and our customers.
Even with this late winter storm, we are affirming our financial guidance ranges and mid points for both adjusted EBITDA and earnings per share.
With that I'll turn the call over to Walt for a discussion of our financial performance.
Your peers.
<unk> first quarter 2022, net income totaled $391 million or <unk> 87 per share a 24% increase compared with the first quarter 2021, when excluding the benefit of winter storm Yuri.
First quarter EBITDA, adjusted EBITDA increased 11% year over year, when excluding winter storm Yuri.
We ended the first quarter with a higher inventory of <unk> Ngls, primarily due to timing and expect to recognize those earnings in the second quarter as our current inventory is fractionated and sold.
Our net debt to EBITDA on an annualized run rate basis remains below four times and we continue to view three five times or lower as our long term aspirational leverage goal.
In April Moody's updated one oak's rating outlook to positive.
And affirmed our investment grade rating, we don't maintain investment grade ratings with Moody's S&P and Fitch.
As Paresh mentioned the recent extreme April storms have impacted our operations in the Rocky Mountain region.
But even with these weather impacts we are affirming our 2022 financial guidance.
Strong volumes prior to weather the weather impacts strengthen drilling activity DUC completions through the remainder of the year and a positive outlook for NGL and natural gas demand this year points to a strong volume exit rate in 2022.
And now I'll turn the call over to Kevin for a commercial update.
During the first quarter, we saw double digit NGL volume growth across all our operating regions compared with the first quarter 2021.
And Rocky Mountain region natural gas processing volumes increased 11% year over year.
After reporting record Rocky Mountain region, natural gas and NGL volumes in the fourth quarter 2021, we saw volumes decreased sequentially in the first quarter 2022, primarily due to normal seasonality across our operating areas.
Through the first four months of the year, we've continued to see encouraging activity from producers and we expect these activity levels to trend higher through the remainder of the year.
Let's take a closer look at our natural gas liquid segment.
Total NGL raw feed throughput volumes increased 17% year over year supported by increasing producer activity and increased ethane recovery.
Rocky Mountain region, NGL volumes increased 24% compared with the first quarter 2021.
In April we reached peak volumes of more than 385000 barrels per day from the region.
Prior to the severe late season storms Pierce discussed earlier.
Mid continent, NGL volumes increased 10% year over year.
As producers continue to increase activity in the mid continent, a large majority of those related Ngls are transported on our system.
So far this year NGL volumes from the region are trending slightly higher than we had originally planned.
In the Permian Basin, NGL volumes increased 23% year over year due to strong producer activity levels, which feed our west, Texas NGL pipeline.
In the Gulf Coast construction continues on our 125000 barrel per day MB five fractionator in Mont Belvieu, which we now expect to be complete in the second quarter of 2023.
<unk> five will increase our total system wide fractionation capacity to more than 1 million barrels per day.
International LPG demand remains strong and we continue to expect both domestic and international ethane demand to continue to increase throughout 2022.
Natural gas prices have increased this year ethane prices have kept pace, providing attractive ethane recovery economics in certain areas of our system.
While first quarter ethane recovery is typically lighter due to natural gas heating demand in typical winter weather impacts, we see strong ethane recovery opportunities for the remainder of the year.
Moving on to the natural gas gathering and processing segment.
In the Rocky Mountain region first quarter processed volumes averaged one 3 billion cubic feet per day, an 11% increase year over year.
In April volumes reached a peak of more than one 4 billion cubic feet per day prior to the storms.
We connected more than 90 wells in the region in the first quarter compared with 38 connections in the first quarter 2021 and are on pace to meet our guidance midpoint of 400, well connections in the region.
There are currently 38 rigs and 12 completion crews operating in the basin with 17 rigs and approximately half of the completion crews on our dedicated acreage.
This continues to be more than enough activity to grow gas production in the basin and on our acreage.
Additionally, the basin wide DUC inventory remains at approximately 500 with half of those on our dedicated acreage.
Recent reports from the North Dakota pipeline authority highlight the long runway of core drilling inventory remaining in the Williston basin.
Enhanced drilling and completion technologies are significantly increasing the basins core acreage and further extending the decades of profitable drilling locations remaining in the region.
The core acreage in the basin has expanded by an additional 3000 square miles with more than 7000 drilling locations added to inventory that are profitable at crude oil prices of $60 per barrel.
In the mid continent region, we continue to see increased activity with three rigs now operating on our acreage and 45 rigs basin wide.
We continue to expect increased natural gas processing volumes from the region compared with 2021 and expect the majority of rigs basin wide to drive additional ngls to our system.
In the natural gas pipeline segment.
Strong first quarter results benefited from increased natural gas sales and higher seasonal volumes compared with the fourth quarter 2021.
We continue to see strong demand for natural gas storage services and are working to expand our facilities to meet this increasing demand.
We recently completed a $1 1 billion cubic feet expansion of our Texas storage facilities.
And announced an open season to increase our storage capabilities in Oklahoma, enabling an additional 4 billion cubic feet of storage capacity to be contracted.
This project is expected to be complete in early 2023.
We also recently announced two open seasons for additional pipeline capacity to address increased demand one on our west Texas pipeline system in the Permian Basin and one on our Viking pipeline in the upper Midwest we.
We continue to work with customers across our natural gas pipeline network to address the evolving transportation and storage needs. As these key assets continue to provide value year round Pierce that concludes my remarks, Thank you, Kevin and Walt the overall dynamics in the midstream space.
And for one of specifically remain positive.
We increased activity.
Strengthened demand and available system operating leverage the U S energy industry is well positioned to be a significant source for domestic and global natural gas and NGL supply for the long term with midstream playing a vital role in a safe and responsible transportation of these vital energy.
Sources.
As we continue to help supply our country in the world with low cost synergy we.
We are also looking to play an important role in the transformation to a lower carbon future.
Your best management practices and collaboration with customers and service providers, we are addressing the growing need for energy products and services today, while also preparing for a long term energy future.
It's the innovation resiliency and dedication of our employees that makes one oak a leader in our industry with.
With the positive momentum, we're seeing in our business and the increasingly positive outlook for the remainder of the year, we are well positioned for yet another year of volume and earnings growth.
With that operator, we're now ready for questions.
Thank you to signal for a question. Please press star one on your telephone keypad also if you are using a speaker phone. Please make sure that your mute button is turned off to allow your signal to reach our equipment.
<unk> you please limit yourself to one question and one follow up.
Once again it is star one at this time for questions.
And first we'll go to Jeremy Tonet with J P. Morgan.
Hi, This is Steve on for on for Jeremy.
Yes, I just wanted to start obviously with the most topical on about weather.
And in the release, we talked about.
Reaching one 4 million cubic feet per day in the Bakken. So I just wanted to see if that's is that an average or was that what you got to and just kind of how that's trending now with without things are there.
This is Kevin.
That reached volume that we said that's not an average for April that was just we wanted to provide.
A number out there that showed where we the gas that was available. So we were at one four Bcf a day.
On a few days there before the storms hit which shows kind of where we were trending in my remarks, I mentioned that we were at our I think Pierce means we are at one one Bcf a day currently and Thats trending up as the wells were brought back online.
Got it thank you and then.
Next one I guess, we'll go to the <unk>.
Just kind of wanted to get some some feedback there on how you're seeing those trending as new wells get drilled are they stay maintaining kind of the <unk> level or are they becoming.
I think more oil based at the early stages and just how youre kind of seeing that go.
Yes, the <unk> when you look at trends over time, obviously, they've been going up I think the numbers like 80% since 2016.
But yes, youll see some fluctuations some minor fluctuations as new wells are brought on the <unk> do increase over time for individual wells the.
<unk> also are a little different across different parts of the basin.
From a regional perspective.
But yes, youll see some dynamics of that will bounce around month to month.
As new wells are brought online and as drilling occurs in different parts of the play but the general trend is it's going to continue to go up.
Got it appreciate it thanks guys.
Sure.
Moving on we'll go to Brian <unk> with UBS.
Hi, Good morning, everyone, maybe just to start off on operations I was wondering if you could talk a little bit more about the completion.
Completion guidance for this year.
We saw roughly 90 wells completed.
Kind of indicate that roughly 25% of the well completions were done in <unk> per the guide so typically knowing that most of the well completions were one oak are back half weighted just due to natural seasonality was curious if you could see some upsides that well completion number.
Particularly as producers specifically the private supposed to take advantage of the current pricing and rig start to materially come back into the basin over the balance of 'twenty two.
Brian This is Sheridan and what I would say as we said in our remarks that we're staying at our previous guidance on well connects but as you said coming out of the first quarter with 90, well connects as a really good start to this year.
Yes.
Fair enough.
Maybe to pivot to just future natural gas segment really outperformed this quarter almost.
I was curious if you could just talk about those future re contracting opportunities specifically around the Permian and around the west Tex system, just given Permian Nat gas tightness and whether there are opportunities to expand west, Texas similar to what we saw one or two in 2018.
Chuck you want to take that one.
Sure absolutely.
Yes, Brian this is Chuck so.
As you said in 2018, we had an expansion. We also re contracted we're seeing right now similar opportunities for this year. We're currently working on a <unk>.
Additional expansion opportunity beyond the open season, that's listed on our website.
And that will be moving Permian gas north as well like we did in 2018, so that's an incremental expansion.
Then on re contracting we see some really good re contracting opportunities this year.
Somewhere in the neighborhood of up to 200 million a day on re contracting.
Great I appreciate all the color and have a great day everyone.
Thank you. Thank you.
And next we'll go to <unk> Satish with Wells Fargo.
Thanks. Good morning, I think you mentioned that NGL volumes in the Bakken reached 385000 barrels per day.
Here to the winter weather, so I mean, that's an 88% utilization rate on your NGL pipe. So I guess my question is why aren't you moving forward within Elk Creek expansion. At this point are you are you waiting for utilization to get closer to a 100% are waiting to see what happens with the gas pipe expansion, just just trying to get a better understanding of your thought process.
And an expansion.
Arnie This is Sheridan when we look at the expansion, we get we look out forward and see when we'll need it and when do we need to start commissioning that expansion and you got to think about that we have about 440000 barrels a day today and at 385 that has quite a bit of incentivised ethane in it.
So we can kind of swing on that as well. So we continue to look through our gathering and processing, what's going on in the basin when we need to expand that when we need to expand the capital in and right now where we're sitting today, we think in the short term we have enough capacity on the system to handle what we need going forward, but we continue to evaluate that opportunity.
To expand and make sure that we put ourselves in a position that when it is time to expand we can expand it quickly.
Got it thanks.
And then.
I wanted to ask about the the rate case on the Guardian pipeline. If you could just ballpark the magnitude of the rate case and how you intend to proceed would you expect to settle with shippers I mean, I know you're probably limited in what you can say, but just any clarity would be helpful. Thanks.
Chuck and I will take that one.
Okay.
Yes.
Yes.
Got a connection problem.
But as we look at the rate case, yes.
It's not going to be a big deal at all when I say, a big deal, it's not going to be material in terms of where we're at from a rate and where we might go.
Yes, those typically will evolve we'll do our best to work with the shippers on the pipe and come up with a rate that we feel is appropriate and move forward, but it's not going to be meaningful to our overall EBITDA.
Got it thanks.
And next we'll go to Colton Bean with Tudor Pickering, Holt <unk> company.
Good morning, just to follow up on Petersen Kevin's comments sounded like $1. One visa processing currently versus the 300 <unk>. So I think in the processing side still down about 15% versus Q1, but actually up for NGL. So one just wanted to clarify that that's what you mentioned in terms of incentivize ethane and then too interested.
And your thoughts on whether we're seeing a more structural shifts.
Primarily due to pricing volatility over the last month or two.
Colin when you say structural shift I'm not sure.
Now on that question.
On the pricing.
Yes, Kevin I think you mentioned that you see ethane opportunities over the balance of the year. So I guess.
It seems like that would imply that you are seeing a pull on ethane.
But just wanted to get your thoughts in the market broadly.
Okay go ahead Jim.
Colton. This is Sheridan I think when we look at the ethane market no doubt, it's going to be ethane recovery rejection is going to be volatile through this year in certain areas.
With the increase in domestic demand, that's coming online and with the increase in international demand or export demand, we still see some growth in ethane demand or a pull coming in right now that named as the only advantage crack in the petrochemicals right. Now we are in the short term seeing a little bit of softness due to that we have some maintenance going on.
In the petrochemical industry and they are working through some of the logistic issues. They havent supply side getting out but that seems to be as we talk to our customers is getting better. So as we see that we that's what gives us confidence that we will see good opportunities to bring more incentivize ethane out of the Bakken for the rest of the year.
Yes, maybe a related question there Oh, sorry go ahead.
No we didn't say anything go ahead.
Yes, just on the optimization marketing it looks like that ticked higher here in Q1, I think historically you all have highlighted the conway to belvieu ethane spread as a key indicator of optimization opportunities I guess, one is that still a good marker and then two can you frame the opportunity that you are seeing it soon.
Well a lot of things that happened in the optimization of marketing between <unk> and <unk> as you remember in <unk>, we were down due to timing of inventory sales that we said, we'd get that back in and 2022, when we got it back in the first quarter of 'twenty one.
And the reason we use ethane as the marker for the Conway to Belvieu spread for optimization is the fact that ethane is the product we have the most of that volume in it that volatility and that spread leaves us a lot of opportunity whether or not it's go into belvieu or in favor of Conway with all products, So where you were able to two.
Use that volatility to make.
Our positions on contracts to make minor either way it is in favor of Conway in favor of Belvieu. What we need is just some volatility between the two markets not necessarily just wide markets to belvieu.
Okay, and I guess in terms of the spread that we've seen just over the course of Q2, I mean is that more.
Maybe offer a little bit of upside relative to that 5% guidance contribution.
Yes, we're seeing a little bit wider spread right now on the ethane side in Q2, and that's mainly right now due to the fact that we have some mid continent petrochemical crackers at our turnaround we think that would be short lived through may but it has given us an upside in the second quarter.
Great I appreciate the time.
And next we'll go to John Mackay with Goldman Sachs.
Hey, thanks for the time.
I wanted to kind of collect some of the comments you guys have had so far.
Just thinking about that.
Flats are unchanged guidance.
Versus some of the weather impacts I guess, you've talked about first quarter, well connects being a little bit better talked about mid con, maybe being a little bit better.
But just can you can.
Can you kind of lineup the moving pieces that get you to kind of maintained guidance versus <unk>.
After the weather impacts specifically as you're kind of ethane recovery assumption actually better now than it was a few months ago. Thanks.
Well this is Kevin.
John I think.
You hit on a bunch of the key attributes we're looking through one yes, we've seen the weather impact our Bakken volumes, but it hasnt changed the rest of the year outlook for our for our growth opportunities in the Bakken both on the G&P side and the NGL side. So.
We see that as very positive and we continue to see activity at or above levels than we were anticipating when we put out guidance. So we think theres going to be some offset there clearly we've had ethane recovery opportunities both so far to date and as well as as we look through the remainder of the year that we believe.
<unk>.
We're going to be strong with.
You mentioned, we're seeing growth theres been some very positive and favorable calls where other processors and in.
And producers in the mid continent about volumes growing there. So we think there's some upside there.
In the Permian again, where we can we haven't talked about it a lot on this call, but we continue to get our fair share of the volume growth coming out of the Permian and like our position with both our West, Texas LPG system as well as our westech West Tex pipe system, we've talked about so there is a lot of <unk>.
<unk> for us and a lot of those other areas.
Including the optimization and marketing side, we have on the NGL business.
And we think those are absolutely going to offset any hurt we may have had with the severe weather impact in.
In April .
That's great. Thanks for pulling this together maybe just as a follow up you guys talked about kind of strong international demand for Ngls can you just remind us where you sit on a on the export idea and kind of what the latest might be.
Well, we continue to work it as we've said for a while it's a piece of the business, we would love to extend the value chain that we see that as a natural extension, it's a nice fee based business, but at the same time, we're working with a lot of different markets.
And.
We're trying to get a deal done.
It would happen, but we're not going to step out and do something that's going to.
Earn a return that we're not used to so we're going to be disciplined we're going to be intentional about about a dock project, but we continue to work it.
Thanks for that appreciate it.
Okay.
Next we'll go to Chase Mulvehill with Bank of America.
Hey, good morning, I guess, a couple of questions and one kind of follow up question I guess maybe ill.
<unk> and <unk>.
One of your competitors conference calls earlier this week.
There was mentioned that the Permian still rejecting about 200 to 200000 barrels a day of ethane.
<unk>.
And obviously, if we hit some bottleneck constraints with natural gas egress and the Permian then you would look to recover that.
So I guess, maybe my question is if this actually does happen and you start.
Go into full ethane recovery mode in the Permian.
What do you think that means for ethane.
I think recovery in other basins do you think that you have to have an offset there and if so kind of what basis do you think you will see.
Some of the offsets.
Yeah, and I think.
All of that 200 as I read that call to all of that 200 may not be recoverable out there in the Permian I can only speak to our system our system were fairly full on recovering.
I think on our system, but if you would see natural gas prices get depressed and if theres more ethane debris recovered out of the Permian that will have a downward pressure on ethane.
As it relates to other basins and probably the first base and we would see come out of is probably are our mid continent basin.
We still have the opportunity to move that mid continent basin in front of the Permian basin by flexing our rates as.
As we've done out of the out of the Bakken because we've always said the Bakken role at full rates will be out of will be in rejection for this year and for the future.
I think it may have some impact on it but I don't think its going to have a major impact on what our forward. What we're forward looking for ethane out of the mid continent.
Okay, Great Thats helpful.
The other question is really just when we think about Bakken and <unk> and kind of look at the situation over the next two or three years do you see any bottlenecks, whether it's for oil Ngls or natural gas and if so which one do you think you hit first.
Well I think yes, I think the basins in really good shape.
Oil is fine with energy transfer and Apple's expansion. They are in great shape NGL, we've talked about we've got capacity currently and we have a quick low cost expansion, we could add another 100000 barrels a day of NGL capacity. So.
So we go to residue, we there's still volume on northern border that can be priced out or pushed out Bakken gas can displace gas coming from from Canada. There is an open season out right now for four or 500 million a day.
Debt.
Northern border.
Has out there on our bison reversal and there are some other smaller expansions from a residue perspective that that are out there being discussed.
That could that will help out the basin from a residue takeaway. So all in all we feel like the capacities that are out there and some of the expansions that are available.
Put the basin in really good shape from a takeaway perspective.
Okay helpful answers I appreciate it I'll turn it back over.
Okay.
And moving on we'll go to Sunil Sibal with Seaport Global Securities.
Yes, hi, good morning folks and thanks for all the clarity.
I just wanted to start off with a couple of clarification. If I heard correctly I think you said it per volumes with reduced by 20% because of the weather event. So it was just.
I wanted to clarify is that 20% based on the peak rates that you mentioned hitting.
In April or is it more related to Q1 averages.
Yes that would be roughly off the one four Bcf a day.
Got it and then.
I think you mentioned also that.
You have.
Run rate to exceed the 400 well connects.
In that <unk> guided to Florida Bakken Scoop.
Is that.
The exit rate, we are talking about how do you think that for the full year average for the full year quarterly.
Probably exceed 400 well connects.
Well I think what Sheridan said was.
We're still maintaining our guidance range, which the midpoint would be 400.
But connecting more than 90 wells in the first quarter is our outstanding start to the year. So so there's definitely we think there could be some upside there.
Got it.
And then one on.
Capex trend. So it seems like you know you expedite the startup date on <unk> a little bit.
And then you're also adding gas capacity.
What does that mean for the total capex.
I saw that Q1 was a little bit higher.
Pick up from Q4.
Yes, we still feel good about our capital guidance range as well.
As we think about as we looked at the first quarter. We always have some seasonal kind of timing things of just routine growth type stuff again, and we did not increase the cost at all for MB five and accelerating that schedule that was just.
Our ability we had some things go our way from a schedule perspective early in the project that allowed us to pull it forward. So the guidance range for capital is still in place.
Got it thanks for that clarification.
Please go ahead.
And our final question will come from Theresa Chen with Barclays.
Hi, Thanks for taking my questions first I just had a question of clarification around the different moving components at the average bundled rate and.
<unk> for the Rocky Mountain NGL raw feed throughput. So if you did on the average basis 26 cents or $3 14 for its average at first quarter and hit $3 85 in April what would be the analogous average bundled rate if there with a lot of incentive ethane attributed to that 385.
Theresa this is sheridan.
Yeah honestly I have no idea, whether it'll be it'll be around the 26 inch the reason I say that is the accountants will work through it and we have a lot of moving parts on that but it's going to be 26 to 27 in that range is where I would say that it is going to come out to be.
Got it.
And to the earlier comment about your customers seeing some alleviation downstream on the pet confront.
Just curious to hear how do you see the pace and path of supply chain models, we're leading out of the Gulf coast to the extent that it can produce some of the academic economic run cuts on ethane cracking and increased demand.
Well I have to say is as we've talked to our customers and seeing what they're seeing in their and they said they have had some issues getting rid of the polyethylene pellets to get them export it out of there or actually get it from the petrochemical facilities to the dock and they keep saying they are working through that and continue to improve that to be better.
They are optimistic that it's going to improve over time as kind of what we're hearing obviously if there is a bottleneck there you could see them slow slow down their production.
Sure they can get rid of the products, but they seem to be more upbeat now than they have in the past.
That's helpful. Thank you and lastly, if I can just squeeze one more in on the cost side <unk> seen some good cost control in first quarter, just wondering your outlook for costs for the year as far as potential inflationary pressures go.
So we've seen we've seen a little bit of the inflationary pressures I would just remind everybody that we also have the escalators on our contracts that we think are more again more than offset the cost increases we have seen.
The first quarter, if we look at op costs. The first quarter is usually just a little bit light as you think about the rest of the year, but we still feel good again all of that's factored in as we talk about reaffirming our guidance.
Inflationary pressures are included in that in that analysis.
Thank you.
Youre welcome.
And now I'd like to turn it back to Mr. <unk> for any additional or closing comments.
Our quiet period for the second quarter starts when we close our books in July and extends until we release earnings in early August we'll provide details for that conference call. At a later date. Thank you all for joining us and have a good day.
Thank you and that does conclude today's conference we'd like to thank everyone for their participation you may now disconnect.